Netflix, Inc. (NASDAQ:NFLX) Takes A New Approach As Apple Inc. (NASDAQ:AAPL) Emerges As A Likely Competitor
For Netflix, Inc. (NASDAQ:NFLX), the game of online streaming of content is one that it has conquered so far but it does not want someone else to destroy the house of streaming it has built. Apple Inc. (NASDAQ:AAPL), too, is the king of the world in its realm and it wants to expand its kingdom.
And therein lies the scope for dangers, battles, winners, losers, and even approaching winter for at least one of the players. Making hit TV shows and superhit movies is a formula none has cracked so far. No Hollywood producer, director or actor can claim to have an unblemished track record of success. HBO, with its long experience in producing shows, will attest to this.
But Netflix wants to bet on original content as that suits its future plans to embrace the whole world in its streaming plans by the end of next year. It doesn’t want to be a place where viewers come to watch shows and movies that are available elsewhere. No Friends, Sex And The City, or Seinfeld and The Sopranos are going to be the USP for Netflix. Nor indeed does Netflix want to be the place for Hunger Games and Transformers. As it has announced today, it wants to rather focus on new movies it is producing — Beasts of No Nation and so on.
Netflix will also be releasing a sequel to Ang Lee’s Crouching Tiger, Hidden Dragon and it has signed agreements with Adam Sandler to produce and star in original movies made for Netflix.
Apple Vs. Netflix
Add Apple to the streaming service provider mix and the content game appears to be headed towards a future when it’s highly fragmented where everybody is producing original content and everybody is a streaming service provider. Not only are the traditional content owners now into online streaming — HBO, Hulu, Disney, CBS, Nickleodeon — technology companies like Yahoo, Sony and Google are pretty serious about putting money into original programming of various sorts.
As Apple mulls its own streaming service by bundling various channels, rumors emerge that it is in talks with Hollywood mavens to persuade them to make shows for Apple. Apple was also rumored to have participated in the bidding war to acquire Jeremy Clarkson and his Top Gear associates — that war was won by Amazon and the new show will be on Amazon Prime Instant Video. Apple is already involved in original music productions after its launch of Apple Music. There is the Beats 1 radio channel that Apple also bankrolls.
Apple is a prisoner of its success. As it rockets past $200 billion a year in revenue and with the astounding profit margins it enjoys and the extraordinary amounts of cash it has in reserve — $200 billion give or take tens of billions — it faces the daunting challenge to keep growing its revenue and profits and that it cannot do without expanding into new territories. If it fails to grow, the stock will react negatively and activist investors and others will challenge Apple about the wisdom of sitting on so much cash.
Caught between a car, a TV, and a hard place, Apple chooses to fall to some temptations — rumors have it that Apple is deeply engaged in an electric vehicle development as well.
The Apple Universe
The Apple universe now comprises consumer hardware such as the Apple Watch, iPhones, iPads, MacBooks, and Apple’s newer ventures have been Apple Music and Apple Pay. The Apple TV set top box continues to evolve with a new iteration expected in a week and we’ll possibly see Apple produced TV shows and movies in a year or two apart from Apple cars, if speculation is to come true. This is not the direction Steve Jobs had charted for Apple when he returned to Apple in the ’90s and when Apple was close to shutting shop and Mr. Jobs ruthlessly trimmed Apple’s product line up.
But times change.