Original Content Competition: Apple Plans To Spend $1b, Netflix Plans $6b For 2017

It’s all about content these days. Netflix is reportedly reading $6b for the good fight, Facebook and YouTube are spending in the same fashion for original content and now The Wall Street Journal is reporting that Apple apparently has a $1b budget to go after original content. They have also reportedly poached Jamie  Erlicht and Zack Van Amburg who are the people behind hit TV shows Breaking Bad and The Crown.

Apple’s $1b bet is still small compared to what Netflix is reportedly investing in programming as the cost of producing shows could very well run into millions of dollars per episode (up $5m for a drama and $2m for a comedy show). Netflix recent and successfully poached Shonda Rhimes whose name is synonymous with hit series like Scandal, Grey’s Anatomy, How to get away with murder and Private Practise among others.

Now that Apple is making its competition against the likes of Netflix, HBO and Amazon more aggressive, it has a dilemma which is that these apps in the App Store give Apple a cut. As the WSJ report puts it, “Apple also has to avoid jeopardizing its 15% cut of subscriptions from its app stores for video services like Netflix and HBO Go—a growing contributor to its $24.35 billion in annual services revenue.”

We don’t how Apple plans to spend the $1b but you can expect they will be shows that could be competitive. Breaking Bad remains one of the most successful TV shows in recent times. A 2013 Time report says The “Breaking Bad” finale drew a reported $250,000 for each 30-second spot. Last season, before the hype began to crest, ads were going for an average of just $56,000. The show was unquestionably a huge success for AMC, The Walking Dead, and Mad Men, Breaking Bad helped AMC become an advertising powerhouse: the network’s ad revenues leaped by 14% last quarter, to $147 million.”

This might just be a sign of things to come for Apple. It’s all about the money these days. Come to think of it, a Game of Thrones episode could cost as much as $10m making it one of the most expensive shows ever as well as one of the most watched and talked about.

To make hit shows, you have to put your money where your mouth is and it would seem like that’s what Apple is doing now but it may not be sufficient if they want play it big like Netflix. Back when Netflix House of Cards and Orange Is the New Black were two dominant original Netflix shows, the company was reportedly spending $2b on content and in 2017, that same company is spending $6b on content.

The competition is on but maybe Apple is treading with caution after all they have the biggest cash pile up of over $250b and could have easily spent heavily on content. Apple is slowly moving from Silicon Valley to Hollywood and could very well be a strategy in the beginning. This is because paying subscribers must match investment but Apple’s experience in this area could very well be an advantage because Apple Music which launched back in 2015 now has over 27 million subscribers.