How Apple could take the original video market by storm

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Credit: REUTERS/Dado Ruvic

The latest speculation about Apple's entry into the world of original video programming suggests the company may finally make its move later this year. But can Apple get out of its own way and embrace Hollywood?

Apple is rarely the first company to market in a new product or service category. Instead, it's famously known for biding its time while it improves on existing technologies and then releases its iterations to the masses. The strategy has been effective in many ways, particularly in the world of entertainment. However, Apple still sits on the sidelines of the modern TV renaissance, and has yet to enter the rapidly evolving market of original video programming.

For years, speculation mounted around whether or not Apple will ever produce its own content, and a recent TheStreet.com report claims the company held talks late last year with producers and Hollywood studios about the possibility of creating iTunes-exclusive TV shows, which could become available sometime in 2016.

In addition to the possibility of offering subscription programming from major TV networks and film studios, the company could build an original content business of its own. 

Both pay TV and exclusive content possible from Apple

Apple could potentially offer both a subscription video service and create original video content, and such a dual-play approach would mirror the strategies of its most likely competitors, including Amazon, Netflix, and Hulu. And the Apple TV streaming box could help complete the company's vision for melding software with premium content and hardware. However, any original programming from Apple wouldn't likely be restricted to Apple TV and would also be available on devices that support iTunes.

Jan Dawson, chief analyst and founder of tech research firm Jackdaw, says Apple should only get into the original content business as part of a broader subscription video service. "I think anyone who gets into subscription video on demand has to make their own exclusive, original content as well," he says. 

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"There's certainly room for companies to make a mark and I'm not at all surprised Apple wants to get into this," says Karen Allen, a digital entertainment consultant based in Los Angeles. Original TV and film programming is "a proven strategy" that adds a layer of exclusivity and differentiation for over-the-top (OTT) content distributors, she says. 

"It also does a lot to push the perception of the service in the eyes of Hollywood," according to Allen, who adds that flagship shows from Netflix, Amazon and Hulu have received Golden Globes, Emmys and other entertainment industry accolades.

Apple late to the game, lacks experience 

The biggest challenge for Apple if it chooses to create original content will be its lack of experience, according to Dawson. Apple hired specialists to develop original content for Apple Music and its Beats 1 service, but video is significantly more expensive and carries a higher risk, he says. "Content creation isn't really Apple's forte."

To succeed in TV and film, Apple needs to bring in established Hollywood players that know how to put shows together, according to Allen. Netflix, Hulu and Amazon all helped to prove that technology companies can develop elite content to compete with Tinseltown's more traditional fare, she says. 

However, Apple's reputation of arrogance and its history of secrecy won't help if it hopes to collaborate and be creative in the TV and film industries, Allen says. "I think Apple's biggest problem is going to be themselves. I don't know that they have a corporate culture to be creative in that sense. I don't know if Apple can stop being a control freak enough to bring in a department and let them do what they do best."

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Despite Apple's long history selling video content on iTunes, the related viewership data on existing customers probably won't be very useful, Dawson says. "Movie and TV show purchases are likely a poor proxy for what people watch as part of a subscription service, but that's all the data Apple really has." Dawson believes Apple's best bet for success would be a dual, on-demand TV and subscription video service. "The most compelling offering from Apple would be a service that combined these two, giving subscribers access to both live linear TV and a huge library of older content," he says.

If Apple does eventually develop original TV shows or films, it will have to play catch-up with the other tech titans that made early moves in this space and currently reap the rewards. However, if Apple can effectively execute a strategy that might at times feel a bit unnatural, market momentum could quickly turn in its favor.

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