Apple Dips Billion-Dollar Toe Into Netflix Challenge
Apple has taken off its gloves in the video content fight.
(Bloomberg) -- Apple Inc. isn’t known for the unique video content offered by Netflix Inc., Walt Disney Co. and Amazon.com Inc., but it may have just taken the gloves off in a new fight.
The iTunes and App Store operator’s partnership with “A+ Hollywood name” Oprah Winfrey Friday may just be the “tip of the spear” in a looming content battle, according to GBH Insights’ Dan Ives.
Ives sees Apple ramping up its content spending toward $4 billion in the next year from a current pace below $1 billion as part of an attempt to launch its own streaming entertainment service. Though that amount is still less than half of what Netflix is expected to spend, the move to sign Oprah was an “aggressive” sign that Apple is willing to significantly expand its budget.
Apple’s Oprah deal comes on the heels of Apple’s reported efforts to make and distribute feature films, as well as last year’s hiring of TV industry veterans Jamie Erlicht and Zack Van Amburg to build an in-house studio.
Content is clearly king, if the value that investors assign it can be trusted. Netflix, widely regarded as the streaming leader, hit a new record last week and maintained its valuation supremacy over Disney , despite the latter’s more diversified business model and pool of intellectual property.
Netflix be warned. Ives calls the latest push a “shot across the bow” that forces competitors to keep “one eye open” on the world’s most valuable company.
To contact the reporter on this story: Brad Olesen in New York at bolesen3@bloomberg.net
To contact the editors responsible for this story: Catherine Larkin at clarkin4@bloomberg.net, Scott Schnipper, Steven Fromm
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