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How Experts View Apple’s $1 Billion Video Budget

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Apple hired producers from Sony

According to The Wall Street Journal and Bloomberg, citing unnamed people with insider knowledge, Apple (AAPL) plans to spend about $1.0 billion to produce and procure original video content in the next 12 months. In June, Apple hired two television producers from Sony Pictures (SNE) to lead its content efforts.

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Experts see Apple aiming at Spotify

RBC Capital Markets analysts weighed in on Apple’s original video push, suggesting that Apple’s move may not be about challenging Netflix (NFLX) or Amazon (AMZN). As reported by MarketWatch, analysts, led by Amit Daryanani, view Apple’s original video drive as a challenge to Spotify.

Spotify is Apple’s main rival in the music streaming business, and it is way ahead in terms of paying customers. While Apple last revealed that its Apple Music service has attracted 30 million paying subscribers, Spotify boasts 60 million paying subscribers. Pandora (P) and Tidal, two other streaming music providers, have 4.9 million and 3.0 million paying subscribers, respectively.

Potential leverage in content license negotiations

Apple has been adding videos to its Apple Music service to increase its appeal, and its investment in original video programming is viewed by experts as another attempt to make its music streaming service more attractive. Analysts also noted that the original video investment could give Apple leverage in negotiation for content licenses with media rights owners.

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