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Why Apple Is Entering the Original Programming Business

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Original programming is getting more competitive

The online streaming segment is getting more competitive by the day. First, Netflix (NFLX) purchased Millarworld, a comic book publisher, earlier this month, to help develop its own programming.

Last week, Amazon (AMZN) announced that it has agreed to a deal with The Walking Dead creator Robert Kirkman, in an attempt to stream its own content. Just a couple of days after that, it was announced that Grey’s Anatomy and Scandal creator Shonda Rhimes is joining the likes of Jerry Seinfeld and Chuck Lorre at Netflix as the company is making serious inroads in original programming.

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Apple entering an already crowded business

Apple (AAPL) is ready to make a splash in Hollywood. The company has set a budget of $1 billion to acquire and create original content over the next year. For perspective, HBO spent nearly $2 billion on content in 2016. In June 2017, the company made a deal with two of Sony’s veterans, Jamie Erlicht and Zack Van Amburg, to take control of content. The $1 billion budget will be in their hands. However, the company may find it difficult to catch up with original programming leaders Amazon and Netflix.

The tech giant would like original programming to bolster its offerings on iTunes, which is an important component of its annual services revenue of ~$25 billion. According to The Wall Street Journal, the company wants to double that amount, to ~$50 billion, by 2020. Services include Apple Music, Apple Pay, and App Store.

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