Why Apple TV+ Can’t Compete Against Netflix and Disney Without a ‘Friends’ or ‘Seinfeld’

Tech giant makes long-awaited foray into entertainment, but its lack of a library will be a challenge

Apple is betting that star power from Jennifer Aniston, Jason Mamoa and Halee Steinfeld will make up for the lack of a robust content offering from its long-awaited streaming service, Apple TV+, which launched Friday.

After years of starts and stops, Apple finally made its foray into the entertainment space with buzzy titles like “The Morning Show,” “For All Mankind,” and “Dickinson,” but not much else. In fact, Apple TV+ is debuting with just eight original series, making a bold bet that it doesn’t need a fully-stocked cupboard to entice subscribers to pay $4.99 a month.

But it took Apple years to make Apple TV+ a reality, and if the tech giant wants to compete on the same playing field as its new streaming competitors like Netflix and Disney, it’s going to need to go shopping, according to industry insiders and analysts.

“They need to acquire some sort of library content, whether it’s just through acquisitions or buying a studio library,” said Deana Myers, research director at Kagan, S&P Global Market Intelligence, who added it “makes no sense” for Apple to go all-in on its originals-only strategy.

Apple is promoting Apple TV+ as the “first all-original subscription video service.”

In the months ahead, Apple TV+ will start rolling out additional new shows, such as M. Night Shyamalan’s “Servant,” and the Octavia Spencer-Aaron Paul thriller “Truth Be Told,” with dozens more in the pipeline. Apple TV+ is also moving forward with second seasons of “Morning Show” and “For All Mankind.”

The company spent the past 16 months landing series from big names like Stephen Spielberg, J.J. Abrams and Oprah Winfrey. But all of those original series don’t provide the immediate lift that 180 episodes of “Seinfeld” will give Netflix in 2021. “Production takes a long time, no matter how it long takes you to build up,” Myers continued. “Netflix has taken years to get the library they have of original content.”

It’s clear that Apple views its own streaming strategy as just one pillar of a larger building. After all, the company is giving away a free year of Apple TV+ to anyone who buys a new iPhone, iPad or computer, which should lead a large pool of customers at the outset who will sample their programming. That already makes them different from pure-content players like Netflix and Disney.

During the company’s earnings call on Wednesday, CEO Tim Cook explained his rationale for giving away the store for free: “It’s a gift to our users and, from a business point of view, we’re really proud of the content. We’d like as many people as possible to view it. This allows us to focus on maximizing subscribers, particularly in the early going. We feel great about doing that. I think it’s a bold move.”

Wedbush analyst Daniel Ives believes that Apple has one of the strongest distribution mechanisms of any of the streamers, with more than 900 million people that own its products. “It’s all set up for them to significantly disrupt streaming. They’ve also priced it aggressively,” said Ives. “They’ve built the castle, but now they need to fill it.”

Apple TV+ is in its infancy stages. Netflix started initially as a competitor to Blockbuster, upending the video rental model by mailing DVDs directly to consumers. Then it moved into streaming content built off of others’ libraries. It wasn’t until 2013 when Netflix shocked Hollywood by developing its own series, with “House of Cards” and “Orange is the New Black.”

The point is: Things always change. And some expect that Apple will eventually shift course and find a way to beef up its content offering from outside sources. “I was at Mipcom and I know they were there trying to do some deals for content,” said Myers.

“At some point in the future I could see them deciding and adding a volume of library content,” one Hollywood studio executive that does business with Apple, told TheWrap.

The past few months have seen big money thrown around for the rights to classic titles like “Seinfeld,” “The Big Bang Theory,” “Friends,” “The Office” and just his week, “South Park,” which cost HBO Max $500 million. Apple may have waited too long to get in this particular part of the streaming game.

“I think that’s going to be the challenge for Apple. How do you make sure you get your hands on enough valuable content to satisfy the wishes and needs of subscribers, once you’ve brought them in,” the executive said. “Apple sells hundreds of millions of devices a year, so they’re always going to have a pathway to acquiring new subscribers. What they’re going to have to figure out, is how they keep them once they’ve got them.”

Ives argues that if Apple was truly serious about challenging for streaming superiority, they would pony up all their cash and buy a studio outright. Recent reports suggested Lionsgate is looking to offload Starz, and Ives believes that an A24, MGM or even Sony, should any of them become available, would make sense for Apple.

“I’d be very surprised if they do not do a content studio acquisition in the next 6-12 months,” he said. “It’s going to be tough to build this brick-by-brick.”

Tim Baysinger

Tim Baysinger

TV Reporter • tim.baysinger@thewrap.com • Twitter: @tim_bays



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