Insights is a new weekly series featuring entertainment industry veteran David Bloom. It represents an experiment of sorts in digital-age journalism and audience engagement with a focus on the intersection of entertainment and technology, an area that David has written about and thought about and been part of in various career incarnations for much of the past 25 years. David welcomes your thoughts, perspectives, calumnies, and kudos at firstname.lastname@example.org, or on Twitter @DavidBloom.
This installment of Insights is brought to you by Beachfront RISE.
In this crazy week in media and tech, Wired magazine’s cover story featured the New York Times telling my long-ago colleague that it wants to be the next Netflix, selling high-quality subscription content for everything from cooking to exercise to video documentaries to, oh yeah, journalism.
Also this week, the New York Post says Amazon wants to be the next HBO, with plans to launch a stand-alone subscription-video network as part of its plan to become “a global news and media company.”
Amazon’s content ambitions have been further emboldened after two of last year’s many acquisitions – Manchester By the Sea and The Salesman – received a total of six Oscar nominations, including Manchester’s Best Picture nom, a first for a streaming service.
Netflix and the Times, by the way, also picked up three Oscar nominations between them, for the documentary shorts Extremis, White Helmets, and 4.1 Miles.
And there are certainly other companies aspiring to build a Netflix-like content cornucopia of subscription revenue.
YouTube just launched its first four original children’s shows for YouTube Red, so its subscription service, now at 8 million members, can better compete with Netflix. Beefing up kids offerings also became slightly more important for Red after it fired YouTube superstar PewDiePie this week for posting an insanely stupid and offensive anti-Semitic segment. Turns out, no matter what Elvis says, 50 million subscribers can be wrong.
In ZuckLand, I’m told Facebook is ransacking Los Angeles for development executives who can help it create or acquire video content. And this week, Facebook unveiled a dedicated app to stream its video content on your TV. Remember that there’s no reason to create a streaming-video app if you don’t plan to stream lots of video.
To be sure, there are lots of reasons to want to be the next HBO. Time Warner reported last week that HBO revenue jumped 5% last year, to nearly $6 billion, and subscribers to its over-the-top apps have tripled since 2015, to 2.4 million.
And Netflix is rocking along after a record quarter where it added 7 million subscribers. That helped push share prices to nearly double levels of a year ago. Among the company’s admirable metrics, it’s worth noting that Netflix plans to spend $6 billion this year on original programming, which is to say slightly more money than HBO made last year. Go big or go home.
But also, as everyone was talking about Being Like Netflix, did anyone notice what happened at Apple this week? The company’s share prices shot to an all-time high on Monday, valuing the company at $700 billion. The world’s second-most-valuable company is Alphabet, the Google parent. And Alphabet’s valuation lags $120 billion behind Apple.
Admittedly, the renewed fervor for Apple stock comes from several, mostly non-entertainment factors, almost all of them surrounding the fact that Apple is again selling countless boatloads of iPhones (half its revenue, three fourths of operating income), especially in big markets such as China. Legendary investor Warren Buffett also quadrupled his Apple holdings when they were down during a recent lull, an important signal to the rest of the market.
So, with anticipation that this year’s 10th anniversary model of the iPhone will be Truly Special, investors got a little heated up. But tucked away in Apple’s latest public pronouncements were some bits suggesting the hardware company is getting a little more Netflix-y too, in its own gargantuan way.
At the Recode Media conference, content king Eddy Cue unveiled trailers for Apple’s first two original series, both unscripted and both headed to the Apple Music subscription service this spring. Cue was coy about Apple’s reported first scripted series, being created with Dr. Dre, or whether it might buy a studio, as Verizon is attempting.
“Four years from now, I don’t know where we’re going to be in relation to this,” said Cue. “We’re trying different things. How fast it grows or where it goes remains to be seen.”
And then Cue talked small on video-content spending: “We’re not out trying to buy a bunch of shows. We’re trying things that are creative, that move culture, that Apple is adding some value to. We’ll see.”
But make no mistake. Apple is already a giant in the subscription-content business. For instance, did you catch the Grammys last Sunday? Chance the Rapper won three, including Best New Artist. Not bad for “a touring artist” who only released his winning album as a digital stream, initially only on Apple Music. Talk about content that moves culture.
Fifteen months after launch, Apple Music already has 20 million subscribers paying $10 a month. That’s about half as many paying subs as the much older Spotify, which just announced a very interesting joint subscription deal with…the New York Times.
All told, Apple’s subscription services and content generated $24.4 billion in revenue last year, including more than $7 billion in the last quarter. Last month, CEO Tim Cook told investors the company hopes to double that number by 2021. That would make for a very big subscription business indeed.
As it is, Apple’s subscription services unit is already nearly the combined size of Viacom (2016 revenues of about $12 billion) and CBS (about $14 billion). Netflix has a market capitalization of $61 billion, pretty good for a company with few physical assets and a relatively new library of original programming, though that’s less than one-tenth of Apple’s overall valuation.
Apple’s sheer size and existing market power with the iTunes Store has no doubt complicated those on-again, off-again talks the company keeps having for some sort of cable-style bundle of programming, which again seem to have gone nowhere, according to recent reports.
And yes, Apple must figure out what comes after iPhones, as phones evolve into whatever is next. Cupertino has to keep growing its subscription business, has to keep exploring autonomous vehicles and augmented reality and the Internet of Things, and has to keep selling lots of phones, computers, watches, streaming devices and more.
So when companies talk about being the next Netflix, I say, fair enough. But maybe that’s not enough. Maybe you should think different.
This installment of Insights is brought to you by Beachfront RISE, the premier app building company that houses all of your content in one place for any device, and monetizes it automatically with their built in programmatic video advertising platform.