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Apple Hires Veteran TV Executives to Head Video Programming

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Cupertino based tech giant, Apple Inc (AAPL - Free Report) , has been ramping up its original content efforts. As part of the move, the company recently announced that it has brought on board two top TV executives – Jamie Erlicht and Zack Van Amburg – to manage its video-programming efforts. They will report to Apple’s senior vice president of Internet Software and Services, Eddy Cue.

Both Erlicht and Amburg were with Sony Corp (SNE - Free Report) for the last 12 years, serving as presidents of Sony Pictures Television. They had played a pivotal role in bringing acclaimed series such as Breaking Bad, The Goldbergs, Justified, Preacher, The Blacklist, Bloodline, The Crown, Rescue Me, The Shield and Sneaky Pete to Sony. 

The development comes on the heels of Apple announcing its first reality TV series – Planet of the Apps. Similar to popular shows like Shark Tank, it is a 10-episode unscripted reality series about apps and app developers. It will have developers presenting their app ideas to a panel of judges, headed by entrepreneurs like Jessica Alba, Gwyneth Paltrow, and Gary Vaynerchuk. Developers who can sell their idea to the judges stand to get $10 million in funds sponsored by Lightspeed Venture Partners, per media reports.

The first episode of the show is available for free on both Apple Music and iTunes. However, the remaining episodes will be available only to Apple Music subscribers. The show has received mostly mediocre reviews, with Variety calling it a “barely competent knock-off of ‘Shark Tank'."

Other series in the pipeline include documentaries on Sean Combs and Clive Davis, as well as Carpool Karaoke, a series based on a segment of the James Corden’s Late Late Show.

Carpool Karaoke: The Series will be available from Aug 8 (every Tuesday) to Apple Music subscribers and will feature a number of celebrities playing their favorite songs while on a road trip. Celebrities like Will Smith, Alicia Keys, John Legend, Shakira, Trevor Noah, Jada Pinkett Smith and Queen Latifah are likely to appear on the show. All these efforts are aimed to boost the subscriber base of Apple Music. In a span of two years, the service has become quite popular, with 27 million paid subscribers.  

Why the Push into Original Programming?

Many tech giants are eyeing the lucrative market of original programming. As the number of cord cutters increase, streaming services become the next big business opportunity. Apple is now looking to create newer revenue streams, as its flagship offering, iPhone, faces sluggish demand.

With iPhone 7 and 7 Plus performing relatively well and the excitement rising for iPhone 8 (dubbed as a super cycle), Apple can breathe easy for now.However, increasing competition, especially from cheaper Chinese handsets like Oppo, Vivo and Xiaomi, is emerging as a big concern. Apple is under great pressure to introduce new products. Apple Pay, Apple Watch and Apple Music are some of the new ventures undertaken by the company. Also, App Store revenues are growing.

Services, which include revenues from Internet Services, App store, Apple Music, AppleCare, Apple Pay, licensing and other services, surged 18% year over year to nearly $7 billion in the last reported quarter.  For Services revenues, Apple remarked that going ahead, it will match the size of a Fortune 100 company.

Though lucrative, this field is highly competitive as well, as Netflix (NFLX - Free Report) and Amazon (AMZN - Free Report) dominate the scene with their award winning series.Reportedly, Netflix and Amazon will be spending $6 billion and $4.5 billion on content this year, respectively.

Apple is seemingly working on those lines and the same has been made pretty obvious by Amburg’s comments. He stated that “Apple has a relentless focus on delighting customers with their products. We will bring that same intention to Apple’s programming and we could not be more excited about what lies ahead.” However, the company has refrained from detailing out its plans and has also not elaborated how much it will be spending on original content.

Even social media services are foraying into this arena. Earlier this year, Facebook Inc brought on board several content creators (which target mostly millennials) like ATTN, Vox Media, BuzzFeed and Group Nine Media to produce shows for its upcoming video service. Also, the company hired an ex-MTV executive, Mina Lefevre, to spearhead its video-viewing efforts on its platform.

There have been quite a few rumours about Apple’s TV efforts. It was widely speculated that the company was going to acquire an established media house like The Walt Disney Company or even Netflix, given the $250 billion plus cash pile it has. It was also rumoured that Apple might collaborate with Hollywood studios to produce movies.

For now, rather than acquiring any big company, Apple seems focused on working to develop its original programming. Financial Times quoted Cue saying “We have exciting plans in store for customers and can’t wait for [Mr Erlicht and Mr Van Amberg] to bring their expertise to Apple — there is much more to come.”

Zacks Rank & Stock Price Movement

At present, Apple carries a Zacks Rank #3 (Hold). In the last one year, shares of the company have registered growth of 49.66% compared with the Zacks categorized Computer Mini industry’s gain of 48.26%.

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