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Apple Sets Sights on Original Content

Can it create the next “Game of Thrones?”

August 17, 2017 | Video

Apple is budgeting roughly $1 billion to invest in original video content in 2018.

According to The Wall Street Journal, the investment could result in as many as 10 new shows.

Apple’s entry into the original content space makes sense given its deep investments in TV and mobile devices, as well as in digital download and streaming services. The company has been ramping up the video content it offers. Last year, Apple bought the unscripted TV series "Carpool Karaoke."

“Content is a vital missing link that could help Apple complete a powerful ecosystem of programming, devices and services,” said eMarketer principal analyst Paul Verna. “Further, Apple’s $1 billion original content budget is likely on a par with its main rivals: Netflix, Amazon and Hulu.”

“Those companies haven’t disclosed how much they spend on originals. But in Netflix’s case estimates compiled by Business Insider, combined with statements by the company, suggest that up to 25% of its $6 billion total content budget goes toward original programming,” Verna added.

Netflix vs. Amazon Video Content Budgets, 2013, 2015 & 2017 (billions)

Indeed, data from IHS Markit, JPMorgan Chase & Co., Netflix and Statista, as cited by Business Insider, found that in 2017, Netflix plans to spend $6 billion on content—including original and licensed content. That’s quite an increase from 2013, at $2.4 billion, and a substantial jump from 2015, when the company spent an estimated $4.9 billion on content.

While this investment puts Apple on a similar playing field with its main rivals, it also means the company is late to a game that the others have been playing for several years.

Take Netflix, for example. During its Q4 2016 earnings call earlier this year, the company announced plans to significantly boost its original content library this year. Netflix also plans to expand total programming hours to 1,000 from 2016’s 600.

The streaming giant is also luring established talent to ramp up its original content.

Just this week, Shonda Rhimes, the powerhouse behind hit shows like “Grey’s Anatomy” and “Scandal,” announced that she’ll be moving her production company to Netflix to work on a new series, as well as other projects.

And Netflix isn’t the only company out there that’s competing for viewership with established entertainment giants like ABC and NBC.

Hulu has also been increasing its original content output. The company saw a lot of success with original series “The Handmaid’s Tale,” as well as “The Mindy Project”—picked up in 2015 when Fox cancelled the show after three seasons.

Meanwhile, Amazon has been making waves with its service. Not only is Amazon’s growth in digital video viewer numbers driven by the rollout of its standalone streaming service, but the company’s increased investment in original content has played a role as well.

eMarketer projects Amazon’s video service will have 85.3 million viewers this year. This represents and 11.9% increase vs. 2016, making it the fastest-growing over-the-top (OTT) service of those covered in the forecast.

Netflix, meanwhile, still leads the category with an expected 128.0 million users in 2017.

Rimma Kats

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