Why Apple Will Not Be The Next Netflix – The Motley Fool

Investors hope that

Apple (NASDAQ: AAPL) event on March 25 will finally mark the company's splashy entry into video streaming may be disappointed.

According to Recode Apple does not plan to launch a direct competitor to Netflix (NASDAQ: NFLX) or Hulu, but instead plans to bind streaming services like HBO and Starz in their ecosystem and offer more convenient access to the streaming services. Although Apple already cuts payments for such services, the difference is that the iPhone manufacturer plans to add a more visible store to Apple TV and other Apple devices to use such streaming services.

Apple will add original programming, as it has long been expected. The company has teamed up with stars like Reese Witherspoon, Jennifer Aniston and Oprah Winfrey, as well as top executives such as Steven Spielberg and J. J. Abrams for a variety of performances. However, the progress of Apple's actions seems to be providing a new portal to existing services, rather than emphasizing Apple's own original programming.

Although financial investors have been waiting for many years for Apple to face a challenge with Netflix, with many even suggesting Apple to acquire the streaming service directly, Apple will not play that game, or at least wherever preferably to the extent Netflix has. That is why.

  An Apple TV interface.

Image Source: Apple.

A cultural context

Netflix is ​​a disruptive, and to be a disturbance, you must take risks. Netflix has experienced the entertainment industry several times, first with its DVD city mail service, then with groundbreaking streaming, and finally spending billions on original content, challenging traditional studios and changing the way Hollywood does business.

Apple under Tim Cook, on the other hand, has been marked by an aversion to risk. Cook has steered the company away from developing the kind of breakthrough products like the iPod and iPhone that revolutionized the tech world over ten years ago. Instead, the company has focused on incremental improvements to the iPhone and parlaying the company's product system and installing its 1.4 billion user base in its fast-growing service segment, which includes the App Store, Apple Music, Apple Pay and other add-on businesses that rely on it. trademark smartphone.

Unlike other technological giants, Apple has also resisted making major acquisitions, and has instead returned more than $ 300 billion to shareholders through buybacks and dividends.

Apple's odyssey on television leading up to Monday's event may best illustrate the company's culture of risk aversion. Apple launched the Apple TV set-top box over ten years ago, but so far, the company has never taken a next step, despite the years that have plagued their television ambitions. Even Steve Jobs fought to convince TV and film studios to license content to Apple so the record companies licensed content for iTunes, and the company never made a stand-alone television set, as anyone hoped it would.

In 2017, Apple took original childrens ladder, launched two performances, Carpool Karaoke which it borrowed from The Late Late Show by James Corden and Shark Tank inspired Apps of the Apps but they both flopped.

Now, Apple has launched several exhibits with A-list talent, but reports have already discovered that the talent is chafing under the tech giant's control. According to The New York Post Hollywood heavyweights have turned on the company, calling it "difficult" to work with and complain about excessive interference and "intrusive" leaders, including CEO Cook. Several rounds of corporate execs notes have caused production delays, and Apple has encouraged creative talent to avoid controversial stories and embrace a positive view of technology. One of Cook's favorite warnings is, "Don't be so bad." This approach can make Apple Apple's creative push, as many hits show in recent years on a kind of controversial topic, including The Sopranos Breaking Bad Mad Men ] House of Cards and Transparent .

Part of Apple's problem seems to be that the company won't risk branding or linking it to a controversial topic because it could potentially inspire a setback and disturb device sales. It's a problem that a stand-alone stream like Netflix doesn't have to worry about. Apple's philosophy also flies in the face of Netflix's hands-off approach to original content, which has won over talent like Gray's Anatomy creator Shonda Rhimes and Glee creator Ryan Murphy and won the plaudits from several show runners. Netflix has also been willing to embrace failure, as it knows that some shows will not stand out, and CEO Reed Hastings even encouraged his content sharing to take on more risks because there were not enough failures.

Dollars and sense

The second challenge for Apple in its original content is that the streaming industry has not proved to be very lucrative to date. It took Netflix almost a decade to generate significant profits from streaming. Hulu, meanwhile, still operates with losses, and Amazon (NASDAQ: AMZN) sees videos that are basically a free gift to entice premieres. Disney (NYSE: DIS) set to launch their own Disney + streaming service, packed with a healthy library of content from Marvel, Pixar and LucasFilm, has recognized among its other features that It will lose money on streaming only when it builds out an audience.

For Apple, who set aside $ 1 billion for its current program round, to really compete in a low-margin industry, even with the giant cash, can only throw good money for bad.

Utilization of the user base and device network may be the best way for the company to enter the streaming site, but it will not tear up the industry as someone has been expecting. We learn more when Apple finally raises the curtain on Monday.

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