Apple budgets $1bn for original content

Apple wants to spend about $1 billion to produce and acquire original TV shows over the next year, according to a report by The Wall Street Journal. 

With the investment, Apple could be adding up to 10 new shows as it sets its eyes on being able to match the high-quality output of networks like HBO.

While the market is already getting crowded even as traditional broadcasters and new media fight over lucrative deals for original hits, Apple is still interested in the space. It previously focused on renting TV shows and movies through iTunes, but this business has been damaged by the rise of subscription services. The company’s share of the movie rental-and-sales market is estimated to have dropped from 50 per cent in 2012 to less than 35 per cent recently.

Apple’s budget looks substantial, but is just table-stakes. HBO spent about $2 billion on content last year, while Amazon spent around $1 billion in 2013, the year after it leapt into original programming. Netflix, meanwhile, is expected to spend more than $6 billion in 2017, according to The Wall Street Journal. This is because making TV is expensive, with season six of Game of Thrones reportedly costing $10 million per episode. Comedies are much cheaper, costing around $2 million per episode, while a drama can carry a fee of $5 million per episode.

Apple already produces some original content including reality show Planet of the Apps, and Carpool Karaoke, but they haven’t been as well received. Still, its $1 billion investment in original content is a smart one. Netflix’s success is credited in part to the popularity of critically-acclaimed shows like House of Cards, and if Apple can produce a hit, it could be central to making its name in online streaming. The company even poached a pair of executives from Sony recently to hunt out such promising shows.