Apple has been challenging existing media companies for years, starting from when iTunes took on the music industry in 2001. Now, the technology giant is looking to challenge Netflix, Amazon, and other streaming TV services. Could this signal an eventual move into sports streaming?
After a strong quarter for revenue growth, with revenue from fast-growing services like music and apps climbing 31 percent year-over-year to $7.27 billion, Apple hinted on an earnings call with analysts Tuesday night about a TV streaming service that could take on existing players.
The company has been working over the past few years to diversify beyond its traditional hardware line, which includes computers, phones, and tablets. That diversification has seen services revenue, such as that from Apple Music, Apple Pay, iCloud, and the App Store, nearly double from early 2017.
Apple has been investing in the talent and assets to build a robust content offering. A year ago, the company made headlines when it announced a spinoff of James Corden’s Carpool Karaoke. That debuted on Apple Music before transitioning to Apple TV. In recent months, Apple has been hiring people in the media and TV worlds, including the former co-presidents of Sony Pictures Television, Jamie Erlicht and Zack Van Amburg, who have been inking production deals with Hollywood heavyweights, including Oprah Winfrey.
On Tuesday, Apple CEO Tim Cook answered a question from an analyst seeking color on Apple’s multi-year partnership with Winfrey, saying they were planning “some great original content.” He pointed to the dwindling days of linear TV and said his company is cooking up something that will leverage the broadcast and production talent that is increasingly part of the team at Cupertino.
“As you know, we hired two highly respected television executives last year and they have been here now for several months and have been working on a project that we’re not really ready to share all the details of it yet, but I couldn’t be more excited about what’s going on there and we’ve got great talent in the area that we’ve sourced from different places and feel really good about what we will eventually offer,” Cook said. “In terms of the sort of the key catalysts and the changes, the cord cutting in our view is only going to accelerate and probably accelerate at a much faster rate than is widely thought. We’re seeing the things that we have on the periphery of this like Apple TV, units and revenue grew by very strong double digits, very, very strong double digits in Q3.”
The company seems to be looking to build a Netflix-like service that it will then widely distribute via Apple TV. Perhaps Apple might even offer promotions to get iPhone users further entrenched into its iOS ecosystem by encouraging them to adopt the service, sort of how Amazon encourages people to visit Whole Foods by offering Prime members 10 percent discounts.
“We’re seeing different providers pick up the Apple TV and use it as their box to go to market with their subscription service. There are, within the 300 million-plus paid subscriptions, some of these are third party video subscriptions and we see the growth that is going on there,” Cook said. “It’s like 100 percent year-over-year. And so all the things from … the outside all point to dramatic changes speeding up in the content industry, and so we’re really happy to be working on some of them, but we’re just not ready to talk about it in depth today.”
So does this mean that Apple might follow Amazon, Facebook and Twitter into sports streaming? The answer to that is unclear. Netflix has so far stayed clear of the live sports challenge, choosing instead to focus on award-winning shows and original content. Netflix CEO Reed Hastings has, in fact, made clear that he wants nothing to do with sports streaming, which has tricky and pricey rights agreements, and will leave battling over that to others.
But almost every other player in this market has, in some way or another, thrown a hat into the sports streaming ring. Facebook has been scooping up live sports rights, including major soccer rights, and helping content creators produce sports-related documentaries, including a new esports docuseries by Formula One. Amazon has renewed its partnership with the NFL for Thursday Night Football, and has been adding traditional sports to its esports-focused social streaming site Twitch.
Hulu, which started out as a Netflix-like service for TV shows, has been rapidly increasing its investment in sports through its $39.99 monthly live TV service and was an official sponsor of the NHL’s Stanley Cup Playoffs and Final. Even Cheddar, which started out as a millennial-focused online news channel, has launched sports-related original shows, including one with Golden State Warriors’ Andre Iguodala. Steph Curry, also from the Warriors, recently relaunched his own YouTube channel after a years-long hiatus.