For the best part of a decade, the heads of Apple, including Steve Jobs and current CEO Tim Cook, have had a side-career teasing fanboys and analysts about a major move into TV and video.
Jobs famously told his biographer, Walter Isaacson, that he “finally cracked” the secret to re-engineering the TV viewing experience, and just weeks before his death called tech columnist Walt Mossberg to say he had figured out how to “remake” television.
Whatever it was Jobs had figured out, though, he took it with him to his grave because nothing like what Jobs described to Iasaacson was ever released.
That didn’t stop his successor, Cook, from continuing the tease, however. For several years after, Cook made a habit of dropping hints about some new TV project or another, and stories leaked out of Hollywood every six months or so that Apple content chief, Eddie Cue, was talking with the studios and TV networks about licensing content for some sort of new Apple video service.
Nothing ever came of those purported discussions, either.
More recently, thing had gone quiet on the TV front as Apple turned its attention to building up its music streaming service and squelching growing investor fears about the future profitability of iPhone sales.
On this week’s Q3 earnings call, however, the TV tease was back on.
“We hired two highly respected television executives last year, and they have been here now for several months and have been working on a project that we’re not really ready to share details about,” Cook said. But he assured analysts he “couldn’t be [more] excited about what’s going on there.”
OK, I’ll take the bait. What could it be?
It’s clearly not any kind of integrated Apple TV set, as Jobs seemed to be contemplating. Nor is it likely to be a new set-top box or dongle, as Cook had hinted at over the years. The two executives he referred to hiring are Jamie Erlicht and Zack Van Amburg, from Sony Pictures Television, where they were responsible for “Breaking Bad,” “The Crown” and “Rescue Me,” among other series. They’re not what you would call hardware guys.
But are Erlicht and Van Amburg there to produce shows or to take another run at licensing and acquiring content from the studios?
As Cook noted on the earnings call, pay-TV cord-cutting is happening at an accelerating rate, but he believes it will accelerate even further, “at a much faster rate,” than generally acknowledged. That means there will be a lot of potential video subscribers up for grabs over the next few years.
I wouldn’t expect Apple to try to launch a virtual MVPD service, as it seemed to be angling for in the past, though. With studios and networks increasingly looking to launch their own direct-to-consumer streaming services, and the consolidation underway in Hollywood, there is likely to be a lot less premium content and established TV brands around license, and prices will be sky high.
I wouldn’t expect Apple to go the Netflix route either. With 140 million video subscribers world wide Netflix has an enormous head start. It’s true that Apple has proved it can come from behind, as it did in catching Spotify in music. But in that case, Apple was able to obtain essentially the same catalog of content as Spotify at comparable prices. Though Apple is sitting on a mountain of cash, taking on Netflix’s $8 billion original content budget and well-oiled production pipeline would be a very heavy lift with a high potential for failure.
Whatever Apple is planning its target is likely Amazon. Apple can’t have missed noticing the strategic value Amazon has derived from Prime Video and its ability to drive business for other parts of the company.
Amazon’s Echo smart speakers and Alexa voice assistant have also given it a firm and rapidly growing footprint in the home, posing a serious threat to Apple’s ambitions in the connected home market. Alexa is also helping drive subscriptions to Amazon Music, which is starting to look like less of an also-ran in a market Apple hopes to dominate.
Apple needs an answer to Amazon in the home. And that means creating a credible alternative to Amazon Prime Video.
Whatever Apple is planning, it won’t be a Netflix-link standalone video streaming service. It will instead be tightly integrated with its broader strategic goals, the way Prime Video is tied to Amazon’s.
And Apple can’t keep up the tease much longer.