After spending upward of $1 billion creating original TV shows, Apple apparently plans to give them away for free. That would certainly be a bold move as Apple muscles into original video production, but it might be the craziest idea ever.
Here are three reasons why it’s a smart strategy — and three more why it could backfire.
Why it’s a great move for Apple
Throughout Apple’s high-profile spending spree, big questions have remained about what, exactly, the company will do with the shows it’s snapping up. Will they be an Apple TV exclusive? An Apple Music value-add? The backbone upon which Apple builds a Netflix competitor?
There are three ways giving all these new shows away make sense.
It’s a shot at Netflix (and others)
Apple, in case you didn’t notice, is kind of a big deal. It’s the world’s most valuable company and the first $1 trillion publicly traded U.S. business. Cupertino possesses a money pile bigger than the cash reserves of some countries.
It’s got so much money, in fact, that it can launch new products without having to immediately worry about whether they’re profitable. That’s a big advantage that Apple Music, for example, has over Spotify. Streaming services don’t currently generate massive profits, but Apple can afford to win a war of attrition.
If Apple’s original content offering becomes an epic hit, that could force others to follow its lead on pricing. And other companies don’t have the deep pockets, or the hardware sales, to match Apple. It’s a power move that proves Apple is serious about disrupting the streaming industry. Because, just like talking about privacy in an industry filled with big data titans, Apple knows others can’t do what it can.
It sucks users deeper into the Apple ecosystem
The Apple ecosystem is an amazing thing to behold. Every device works with every other device to the point where there’s no reason to leave. Another company might release a tablet that’s five times better than the iPad, but there’s a good chance I’ll still opt for the iPad because it talks so nicely to my iMac, MacBook, Apple Watch and iPhone. Plus, it’s got all my iOS apps.
I don’t think anybody will buy the latest iPhone purely because it comes with a show they enjoy. But it’s one more reason to do so. If Apple can make a show with the appeal of, say, Netflix’s Stranger Things, that’s going to be one hell of an exclusive to keep people from straying to rival platforms.
Help Apple TV shows build an audience quickly
Apple has one of the best known brands in the world. But it’s not diving into an area in desperate need of modernization here. People love Netflix. And players like Amazon and Hulu also continue to find success with original content.
If Apple wants to become a streaming contender, it needs to play catch up before it loses any more ground. Fortunately, it’s got a great path to an audience. Much as ARKit immediately made Apple a player in augmented reality (thanks to its availability on billions of devices around the world), Apple’s free video content could yield overnight hits.
If just a fraction of Apple’s customers watches these shows, that still would be a bigger audience than most shows could dream of having.
Why it’s not a great move for Apple
On the other hand, giving away $1 billion worth of original TV shows seems kind of nutty.
No direct revenue
Apple’s services division — referring to the App Store, AppleCare, Apple Pay, Apple Music and broadly everything else that’s not based on hardware sales — is booming. For at least a couple of years, it has been worth more than Apple’s individual iPad, Mac and Apple Watch businesses.
Last quarter, Apple raked in $9.55 billion in software and services revenue. That was a jump of 31 percent from the same quarter a year earlier. Apple CEO Tim Cook says the company hopes its services division will pull in $14 billion a year by 2020.
This is certainly achievable — but free TV content isn’t going to help. Apple’s cash reserves mean the company can float loss leaders: products sold at a loss in order to attract more overall customers. However, if Apple really wants to make services into a powerhouse, surely it needs more revenue-generating pieces of the puzzle.
There are other ways Apple could make money from content that doesn’t involve charging customers. Think advertising or licensing it to other platforms. But, honestly, I’d rather pay than sit through ads to watch content. And licensing Apple productions to other platforms would take away the exclusivity selling point.
It could backfire
If you give away upward of $1 billion dollars’ worth of stuff, you expect people to be grateful, right? That’s certainly what you’d expect, but people can be kind of crazy.
Apple tried giving away high-profile content in 2014. The company “gifted” a copy of U2’s Songs of Innocence album to all iPhone owners as a promotional stunt. But the company faced major blowback from customers, with the giveaway labelled “worse than spam” in the media. Even usually confident U2 frontman Bono blamed the move on “megalomania.” Apple wound up issuing instructions to its customers on how to delete the offending songs.
To be fair to Apple, it learned its lesson from the U2 debacle. It would be extremely unlikely that it would automatically push the entirety of all 20-plus shows it’s making onto users’ devices. But whenever you’re pushing content to customers who haven’t explicitly sought it out, there’s a risk.
Imagine endless notifications asking if you want to download the latest episode of some show you’ve never watched. Imagine parents getting upset that their iPhone-owning kids have been exposed to inappropriate content they didn’t request.
Apple might think this is a guaranteed goodwill generator. But there are plenty of ways it could go wrong.
This is the one that I’m most worried about. When I asked a non-tech-savvy friend about their thoughts on Apple giving content away for free, they said, “Maybe it’s not good enough to charge for.”
With the names Apple has attracted for its original content, I don’t think quality will be lacking. But I do think there’s a chance that making shows that will appeal to everyone — and that can be played safely in Apple Stores — will result in generic content. We’ve already heard reports suggesting that Apple is keen to make squeaky-clean shows. Creators have already parted way with Apple over disagreements about this approach.
If Apple launches a premium subscription service, it seems like there’s more leeway to produce adult content. While it doesn’t have to be the case, there’s a greater expectation that content that’s available to everyone should be content for everyone.
In itself, this isn’t necessarily a bad thing. Plenty of the world’s greatest movies are G-rated, while there’s a lot of trash that’s aimed at adults. But Apple’s original content so far — the banal Planet of the Apps and the ho-hum Carpool Karaoke — were boring and generic in a way that Apple rarely is. Let’s hope the company’s scripted entertainment doesn’t follow suit.
What do I think will happen?
Needless to say, Apple’s a smart company. It’s clearly got big plans for its original content initiatives, based on the A-grade, on- and off-screen talent that it’s hired. The prospect of Apple giving away its content has some real upsides, but some major negatives as well. Personally, I want Apple to succeed in this space. The more companies making great content, the better.
Do you think distributing its shows for free is the right move for Apple to make? Let us know your thoughts in the comments below.