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lo-res_seg029564-sSales of the iPad and iPhone may be slowing, but do not count Apple, Inc., out of the entertainment game just yet. The technology giant is taking steps to expand the services available to subscribers of Apple’s media-streaming service. Apple hopes to begin offering new original content, some carefully selected scripted television programs, and a selection of films by the end of 2017.

Such a move would give Apple a leg up in the current battle for subscribers that is ongoing between Apple Music and Spotify. This foray into the media business also would represent a significant turn in strategy for Apple, which until now has only distributed other companies’ media. In particular, such a strategic move promises to add more value to the Apple Music component of its business, which has enjoyed a growing subscriber base, increasing by 22 percent, even as other areas of the Apple brand have lost market share amid rising competition in the technology world—especially in the valuable Chinese market.

As the company moves forward with its plan, observers expect Apple’s entrance into the media market to be well planned for success. The company has been meeting with experienced marketing executives to design a strategy to promote its new content. This business strategy clearly seeks to distinguish Apple’s offerings from Netflix. For example, it promises to share any data it collects about how many people watch its content and provide demographic data about its users. Netflix does not share such information with content creators, which has caused problems for Hollywood veterans who rely on such information to create appealing content and to gain funding for future projects. Furthermore, Apple has set its sights on offering a limited selection of quality programming; it does not intend to compete with Netflix by offering a wide selection of content (or spending a substantial amount of money for the rights to do so).

Although Apple has long flirted with various ideas about how to enter the entertainment media space—including a plan to offer a “skinny” cable bundle that never fully materialized and investigating a possible merger with Time Warner Inc.—it now seems poised to take a bold step and leverage a new opportunity in a new arena. Apple missed its own internal revenue targets for the first time in at least seven years when sales of the iPhone 6s fell short of projections. This fresh new idea may help Apple weather the fickle technology market and help create a broad-based media empire that can withstand a variety of changing market pressures.

Discussion Questions:

  1. How does adding content add value?
  2. Is content from Apple a new product or a new service introduction?

Source: Ben Fritz, Tripp Mickle, and Hannah Karp, “Apple Sets Its Sights on Hollywood with Plans for Original Content,” The Wall Street Journal, January 12, 2017