This article titled “Apple’s crown is slipping – will news and TV shows be its next big thing?” was written by Dominic Rushe in New York, for The Observer on Sunday 24th March 2019 08.00 UTC
“It’s showtime,” reads the invite for Apple’s next big launch. It sure is. On Monday at the 1,000-seat Steve Jobs Theatre in Apple’s $5bn space-age campus in Cupertino, California, the company’s chief executive, Tim Cook, will unveil his big plans to become a modern media mogul.
Details of the plans are sketchy but it appears Apple will be launching a new platform for news publishers with paywalls – the Wall Street Journal is in, New York Times and Washington Post are not – and announcing a series of new TV deals and original programmes that will put it head to head with Netflix, Amazon, Hulu and their rivals in streaming media as they fight it out to be the new kings of Hollywood.
Cook, who took over running Apple from Jobs in 2011, has a lot riding on the event. Jobs was always going to be a tough act to follow and while Cook may lack his charisma he has delivered on performance.
When Jobs died in October 2011, Apple was valued at about $300bn. It is now worth three times that. Cook – an operational whiz – has turned Apple into a cash-generating juggernaut that is the most valuable brand in the world.
However, that crown is slipping. The iPhone is unarguably the most successful consumer product of its generation, with more than 2bn sold, and a product that helped the company amass a $245bn cash pile – nearly equal to the yearly economic output of Portugal. But sales are slowing. In January Apple reported its first decline in revenues and profits in over a decade as phone sales stalled.
Media fits neatly into Cook’s vision of Apple’s future: a company that sells you the most covetable electronic gadgets in the world and keeps you loyal with content and communication services pre-loaded on to the hardware.
Apple has more than 360 million paying subscribers across its “services sector” which includes iTunes, Apple Music, the App Store, iCloud and Apple Pay. That segment brought in a record $10.9bn in its last reported quarter. But that figure is still a small part of the $84.3bn total revenues the company reported and Apple remains heavily dependent on a product – the iPhone – that has passed its prime.
Cook’s media launch, said Max Wolff, managing partner at consultancy Multivariate Solutions and a longtime Apple watcher, is designed to keep the company’s customers within its “walled garden”. If consumers are subscribing to the company’s streaming and other media services with Apple Pay, and it is all optimized to their iPhone, Apple Watch and MacBook, they are less likely to ditch Cook’s walled garden.
But Wolff is not convinced that this launch is the one that can end Apple’s iPhone issues. “They are right to create a space for themselves,” he says, given Amazon, Netflix, Google and others are spending billions on media, he said. “The problem is with content: they don’t have a great history.”
Cook’s taste in dad jeans pretty much tells you everything you want to know about his media tastes. Here’s the man who gave half a billion iTunes users a U2 album they hadn’t asked for and was surprised they didn’t want it. The marketing stunt backfired so spectacularly that Bono apologized for it.
Nor does his taste in film appear to be on trend. “Show me movies with Kevin Hart,” Cook commanded Siri, Apple’s AI assistant, while demonstrating the “great movies” available on Apple TV a couple of years ago. Admittedly this was before Hart had become a pariah for his homophobic “jokes”. But it was after he’d released stinkers like Soul Plane and Think Like A Man Too. The Observer’s Mark Kermode described viewing the latter as being “like being the only sober person in a room full of drunks”.
In the new golden age of TV money isn’t everything (not least because Netflix, Amazon et al also have plenty). Taste matters. And there is some evidence that Apple executives are imposing theirs on the producers working for them.
According to the New York Post Apple execs – including Cook – have been nitpicking over casting and themes. The Wall Street Journal reported that Apple execs asked the director M Night Shyamalan to remove crucifixes from a set and canned a show about the sex, drugs and hip-hop life of the music mogul Dr Dre for fear they might offend viewers – and presumably threaten sales. Apple declined to comment on any of these reports.
“They want hits but they are very risk averse. Given what they are competing with that’s a potential problem,” said one producer, who has discussed show ideas with Apple executives and who spoke on condition on anonymity.
One comparison to Apple’s media strategy is Disney, with its family friendly films, TV shows and theme parks. But Disney too has a video streaming service in the works, as does AT&T’s Warner Media. How many streaming services are people prepared to pay for? We may be about to find out. In the meantime Netflix is expected to spend $15bn on original content this year and has pointedly said it will not be part of the new Apple service.
If Monday’s launch proves a success for Cook it would signal a new chapter for Apple. Its failure would underline the company’s (enviable) problem: how does this immensely rich and successful company follow the iPhone?
“This is not make or break for Apple,” says Wolff. “It doesn’t have to be this. But they have to come up with something soon. Legacy coasting is a bad business model in technology.”
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