The Business
THE HOLLYWOOD REPORTER 46 OCTOBER 16, 2019
AnalysisiPhones are the
primary revenue
driver, but with
rising prices and
innovation slowing,
people hold on to
their phones longer.second wave of projects. M. Night Shyamalan
thriller Servant will launch Nov. 28, and
Octavia Spencer’s Tr u t h B e To l d is due Dec. 6.
Renewals already are being handed down for
Dickinson (production on season two is under-
way), with See, Little America and the Hilde
Lysiak drama Home Before Dark also quietly
picked up. Morning Show, picked up with a two-
season, 20-episode order, already is searching
for a high-profile male lead to replace Steve
Carell (who, spoiler alert, has a one-year deal).
IF TV+ IS SUCCESSFUL, IT COULD BECOME
a key driver of revenue for Apple’s services
division, which houses Apple Music, Apple
News, iCloud and other nonhardware prod-
ucts. In 2016, Cook gave Cue the lofty goal of
doubling services revenue to nearly $50 billion
by 2020 as the company seeks new ways to
diversify its business away from iPhone sales.
“Apple has an innovation crisis,” says Jeffrey
Cole, director of USC Annenberg’s Center for
the Digital Future. “Entertainment is one of
their attempts to do something innovative,
but they’re just dabbling.”
Still, it’s a far cry from just a few years ago,
when Apple executives maintained that they
didn’t have Hollywood envy, even as they
operated a large marketplace for digital pur-
chase of films and TV shows and quietly tried
(and failed) to launch a skinny TV bundle. In
2016, the company made a halfhearted move
into programming with Planet of the Apps, a
Shark Tank-style show that featured mentors
will.i.am and Gwyneth Paltrow, and a spinoff
of James Corden’s Carpool Karaoke. But Cue
remained adamant Apple wasn’t “out to buy a
bunch of shows.”
Things changed in summer 2017. Planet of
the Apps was making little noise and Carpool
Karaoke’s launch had been delayed. Vital Signs,
commissioned by Jimmy Iovine and created by
Dr. Dre (the duo had sold Beats Electronics to
Apple three years earlier) had secretly shot its
entire first season. But with at least one orgy
scene and heavy violence, it was deemed too
explicit for the conservative sensibilities of
Cook, per one source involved in the project,
and it was shelved indefinitely. (Apple has
never confirmed the show’s existence.)
Apple needed someone with real entertain-
ment experience to compete in the age of Peak
TV. It found two such executives in Erlicht
and Van Amburg, who as the leaders of Sony
Pictures TV had found success with Breaking
Bad and The Crown. With their appointment
and Apple’s cash, the tech company quickly
rose up the list of most desired buyers in town.
“They’re going after top-tier creative talent,
and they’ve been aggressive,” says Kenneally.
However, early enthusiasm for Apple began
to wane at the beginning of this year as the
town waited for more concrete details about
the service. For a creative community that
isn’t accustomed to being kept in the dark
about how a project will roll out, the compa-
ny’s star-studded March event at the Steve Jobs
Theatre in Cupertino was a bit of a disappoint-
ment. While the “TV+” name was revealed,
little footage was shown and no details about
price or launch date were given (sources say
the initial plan was to launch in summer).
“They’re the most secretive company ever,”
says one producer with an Apple show.
A month later, Disney CEO Bob Iger stood
before investors and revealed that Disney+
would offer new Marvel, Pixar and Star Wars
programming for $7 a month, plus a mas-
sive amount of library titles, including the
full Simpsons catalog. Notes the producer:
“Everyone was feeling like Apple threw the
best prom ever. Then Disney came out, andsubscriptions like HBO — won’t come with a
library. That means TV+ will live or die on the
strength of its originals. Less than a month
from launch, multiple people say that behind
the scenes, the strategy around arranging
critic and tastemaker screenings has been
chaotic. “It’s TV, not a product rollout, but
that’s how they’re treating it,” says one publi-
cist with experience working with Apple.
The power of Apple’s brand can make up for
areas where it’s catching up with Hollywood
practices. Take Morning Show, for which Apple
launched a teaser trailer that featured no foot-
age of its megawatt stars and perplexed many
industry insiders. The full trailer, released a
few days later, proved more successful and has
been viewed more than 24 million times.
Meanwhile, Van Amburg and Erlicht con-
tinue to pursue big talent-friendly deals (as a
global company, it pays a premium to control
worldwide rights). The duo bid $500 million
to land an exclusive film and TV overall with
J.J. Abrams’ Bad Robot, which ultimately opted
for less money but the ability to sell elsewhere
by staying with WarnerMedia. (Instead,
Apple will license three shows from Abrams
and Warners.) Graham Yost (Justified) and
Simon Kinberg (X-Men) also quietly signed
Apple overall deals. And Josh Schwartz and
Stephanie Savage — who opted to sell passion
project Looking for Alaska to Hulu rather than
take a risk with Apple — inked a first-look
deal with the company for the future. “They
are a magnet for amazing actors, they’re
open to taking big risks and putting a tre-
mendous amount of resources behind them,”
says Savage.
Still, Wedbush’s Ives calls it a “massive
headscratcher” that a company with a $1 tril-
lion market cap isn’t competing head-to-head
with the $15 billion that Netflix is estimated
to be spending per year. “There continues
to be a major content hole that they’re going
to have to fix either organically or through
acquisition,” says Ives, who calls MGM,
Lionsgate, Sony and A24 “digestible” acquisi-
tions, but adds that the purchase of a Netflix
or ViacomCBS would be a “bigger and bolder”
play. USC’s Cole suggests that the family-
focused Disney makes the most sense for
Apple to gobble up given CEO Bob Iger’s revela-
tion that the two companies already may have
merged if founder Steve Jobs were still alive.
(Iger until recently was on Apple’s board.) For
now, Apple will storm Hollywood on its own.
On Nov. 1, nearly 1 billion people worldwide
will wake up to discover that a new show star-
ring Jennifer Aniston and Reese Witherspoon
is waiting for them on their phones. It might
cost them $5, but Apple already will have
their credit card information, so paying will
be as simple as the push of a button. Apple
might not yet have completely figured out
Holly wood. But with that kind of power, does
it need to?Apple’s
Aim: $50B
in Services
Revenue
IPHONE
APPLE SERVICES*Projected. Source: Apple2016 2017 2018 2020*$24.3B$137.6B$30B$141.3B$37.2B$166.7B$48.6BTim Cook announced in 2016 that
Apple hoped to double revenue from
services like TV and music by 2020,
and it’s on track to hit that target.everyone realized, ‘Maybe it didn’t.’ ”
Apple ultimately revealed in September
that TV+ would be one of the lowest-priced
subscription offerings on the market — and
free for a year with the purchase of an iPhone,
iPad, Mac or Apple TV. It’s a move that gives it
a serious leg up in the streaming wars, where
Netflix’s standard plan is $13 a month and
AT&T’s HBO Max is expected to sell for $15 (or
more) a month. The question now is whether
the small slate of originals available at launch
— including Morning Show, See, Dickinson and
For All Mankind (a revisionist space drama
from Battlestar Galactica creator Ron Moore)
as well as a handful of kids programs like
Snoopy in Space and unscripted projects like
documentary The Elephant Queen and Oprah’s
book club — will offer enough for the price.
Unlike Netflix or Hulu, TV+ — which is
bundled within the larger TV app that offers
movie rentals and access to third-party$150B100B50B