Titans of Tech: Apple and Netflix Compete in the Race for Original Content

In the booming era of original content, big players such as Netflix and Apple are increasingly focusing their attention and investments on the creation of unique, attention-grabbing shows. According to a recent report by The Wall Street Journal, Apple has now earmarked a whopping $1 billion budget for original content. In further commitment to this course, it has reportedly also hired Hollywood honchos Jamie Erlicht and Zack Van Amburg, the creative forces behind hit TV shows such as Breaking Bad and The Crown.

Even though Apple’s $1 billion budget feels indulgent, it remains modest compared to Netflix’s apparent annual spend of $6 billion on programming. Each episode of a high-production show could easily cost millions of dollars, dramatically increasing the overall spend. Alongside its generous budget, Netflix has recently landed a strategic anchor in the form of Shonda Rhimes, famed for producing hit series such as Scandal, Grey’s Anatomy, How to Get Away with Murder, and Private Practice.

Apple’s ramped up commitment to original content also poses an interesting predicament. As the competition with other content producers like Netflix, HBO, and Amazon intensifies, Apple must carefully navigate the impact on its 15% subscription cut from App Store apps for video services. According to the WSJ report, this revenue stream contributes a significant portion to its $24.35 billion in annual services revenue.

The specifics on how Apple plans to allocate its $1 billion budget remain unclear. However, Apple’s recruited creatives and their past success with shows like Breaking Bad – as a 2013 Time report indicates, the final episode of the series drew in $250,000 for every 30-second spot – provides a promising sign of Apple’s investment in quality content.

Apple’s investment hints at a future where big-budget quality shows become the norm, echoing extravagant productions like Game of Thrones, which costs a captivating $10 million per episode. With this move, Apple and other tech giants are demonstrating a clear belief in the power of storytelling to captivate audiences and create value.

To produce hits, companies are compelled to invest heavily. However, not all tech giants throw all their chips on the table at once. Netflix, for example, was reportedly investing $2 billion in original content during its early years featuring dominant shows like House of Cards and Orange Is the New Black. Now, the entertainment titan spends triple that amount annually.

While the competition between Apple and its peers escalates, it’s worth noting that Apple enjoys the most significant cash reserve of over $250 billion. Despite these deep pockets, Apple are exercising caution in their spending on original content. Slowly transitioning from the stronghold of Silicon Valley to the glitz of Hollywood seems to be a strategic move. Their experience with Apple Music, launching in 2015 and boasting over 27 million subscribers to date, could provide a significant advantage for their foray into original video content.