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iHollywood: Are You Ready for Apple Shows?

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Apple is gearing up to produce or acquire its own video content. The company is looking for around ten TV shows to finance.

The $1 billion effort might seem small compared to the scale of Apple’s market cap of over $830 billion, but the effort could have a big effect on competitors like Netflix, Amazon and HBO.

The market for internet delivered original video content is still young, and a big new entrant like Apple could upend its balance. Tripp Mickle explains the effort by Apple, writing:

The budget will be in the hands of Hollywood veterans Jamie Erlicht and Zack Van Amburg,poached in June from Sony Corp. to oversee content acquisition and video strategy. They exited their Sony contracts a month early and started working this month from Apple’s Los Angeles offices, where they are taking over programming responsibilities from the Apple Music team, according to the people familiar with the matter.

Elbowing into the crowded video business won’t be easy. Amazon and Netflix Inc. have considerable head starts and far bigger programming budgets. 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.

Programming costs can range from more than $2 million an episode for a comedy to more than $5 million for a drama. An episode of some high-end shows such as “Game of Thrones” can cost more than $10 million to produce.

The back-to-back success of the original shows “House of Cards” and “Orange Is the New Black” is credited with building Netflix’s business. At the time they were released the company’s annual budget for original and acquired programming was about $2 billion; this year it is expected to spend more than $6 billion.

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E.J. Smith

Editor-in-Chief
E.J. Smith is Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH. His first drum set was a 5-piece Slingerland with Zilldjians. He grew-up worshiping Neil Peart of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West and Paris. Please get in touch with E.J. at ejsmith@youngresearch.com.