Apple Inc. is taking pitches from Hollywood producers and courting television marketing executives as it considers bolstering its Apple Music service with original movies and TV shows, according to people familiar with the discussions.
Apple has toyed with playing a larger role in entertainment several times, only to either retreat in the face of roadblocks or opt for smaller moves. A goal of streaming broadcast and cable television seamlessly to Apple TV never materialized, for instance. Instead, it’s worked on a concert film with Taylor Swift and video shorts with artists such as Drake. It cut a deal with CBS for a program based on the “Carpool Karaoke” skit featuring late-night talk show host James Corden and is planning a reality show about technology start-ups.
But Apple has the cash, cachet and incentive to push further. Less clear is whether the Cupertino company’s ambition is to take on HBO and Netflix or simply to launch occasional gambits to encourage Apple Music sign-ups.
A person not authorized to speak publicly about the sensitive talks said Apple has told people in the entertainment industry that productions greenlighted and funded by the company would become available to people who pay $9.99 a month for Apple Music. The Wall Street Journal first reported on the discussions.
Though the Apple Music service has reached 20 million subscribers in less than two years, many consumers see no reason to ditch YouTube, Spotify and other rival streaming services. Spotify has double the number of paying members, while YouTube hasn’t released such figures. Access to high-caliber programming could force people to reconsider.
According to an entertainment industry executive, content creators have been pitching scripted projects that Apple would produce.
But executives at several Hollywood studios said Thursday that they are not in talks with Apple about joint productions or even licensing old TV shows or movies.
An Apple spokesperson didn’t respond to a request to comment.
Apple finds itself at a pivotal moment, coming off its first annual sales decline since 2001. The company’s widening power in global technology and entertainment stems from sales of its iPhone. The pricey and hugely profitable gadget has turned Apple into the world’s most valuable company. But with more than 1 billion iPhones sold, sales have begun to flatten out. People are switching to new models less often or are opting for other brands, whose devices are often more affordable or customizable.
The company has yet to demonstrate a product or service that can take over for the iPhone’s once-phenomenal sales growth. But many analysts view selling access to entertainment as at least part of the solution.
Apple has been a major distributor of entertainment since the launch of the iTunes online music store in 2003 and the mobile App Store five years later. Sales from the stores contribute to Apple’s $24 billion in annual services revenue. Though that represents a quarter of what the iPhone brings in, it’s a low-cost business.
Adding content production to the mix could send expenses soaring and drag down profit. Licensing fees have held back Spotify’s earnings, while Netflix has cut into potential profit to bet billions of dollars annually on its own content-making division.
Hollywood veterans are skeptical of Apple’s ability to succeed in the same pool.
Apple’s entry would come years after those of its competitors. It would need to develop a knack for knowing not just what buttons people want on their computers, but also what celebrities they want to watch. Staying hip in hardware, software and showbiz could stretch the company’s creativity.
Bill Mechanic, the former chairman and chief executive of Fox Filmed Entertainment, noted that outsiders making a foray into Hollywood have been predicted to “take over the world” before, but it never quite happens that way. An industry as old, cyclical and diffuse as the entertainment business is difficult to dominate — to say nothing of doing it for long.
“You can’t ignore companies like Apple,” said Mechanic, now a film producer. “Those are players that have the deep pockets to withstand a learning curve, and they find their niche. I don’t mean ‘niche’ as a small thing. They find their place in the stream of content.”
Onetime Hollywood upstarts such as HBO, Amazon and Pixar have found their corners in the ecosystem. They required — in the parlance of the tech industry — a “killer app” to hook viewers and legitimize their production businesses. For Netflix it was “House of Cards,” for HBO it was “The Sopranos,” for Pixar, then led by Apple co-founder Steve Jobs, it was “Toy Story.”
Apple could be looking for such a project. And its investment will be welcome, said John Landgraf, chief executive at TV channel FX.
“There are extraordinary amounts of resources and capital in Silicon Valley and they are beginning to flow through Netflix, Amazon and now others in the programming business, and that is creating an acceleration in the increase in programming,” he said.
Producer Bill Gerber said the industry benefits from having more buyers for programming.
“If they make movies like they make iPhones, they will be great,” said Gerber, whose credits include “Gran Torino” and "The Dukes of Hazzard.”
But should projects backed by Apple fizzle, it wouldn’t shy away from retreating from Hollywood yet again. The company has a history of halting or revamping ventures despite previous investment.
A new factor in Apple’s favor this time around in film and TV is the long list of former high-level studio executives available as resources. Last year saw a major changing of the guard.
Former 20th Century Fox Chairman Jim Gianopulos stepped down from his post; Rob Moore, the former vice chairman of Paramount Pictures, exited that studio; and Jeffrey Katzenberg sold DreamWorks Animation to NBCUniversal and vacated the CEO role.