Apple acknowledges excessive operating costs for streaming service
Apple TV+ is making headlines again, this time for its efforts to rein in spending on its original content. According to a report by Bloomberg’s Lucas Shaw, Apple executive Eddy Cue is urging the heads of Apple’s studio, Zack Van Amburg and Jamie Erlicht, to exercise more control over the budget for their projects.
One notable example of overspending at Apple TV+ is the series “Severance,” which is set to cost a staggering $20 million per episode for its upcoming season. This hefty price tag is raising eyebrows, especially considering the show’s lack of digital dragons or other extravagant elements.
It’s not uncommon for new streaming platforms to grapple with overspending as they navigate the competitive market. However, Apple has built a reputation for being a generous spender in Hollywood, thanks in part to its massive valuation of over $3 trillion and annual profits exceeding $100 billion. The company’s financial prowess has allowed it to invest heavily in content creation, despite claims that it is not the most extravagant spender in the industry.
One puzzling aspect of Apple’s content strategy is its insistence on the profitability of its box-office disappointments. This raises questions about the company’s approach to evaluating the success of its projects and the true impact of its content investments.
The fundamental question that has lingered since the launch of Apple TV+ in 2019 is the purpose of the streaming service within Apple’s ecosystem. While some speculate that Apple aims to diversify its revenue streams beyond hardware sales, others suggest that Apple TV+ serves as a marketing tool to attract customers to its devices.
Despite these theories, Apple TV+ has struggled to achieve widespread popularity compared to industry leaders like Netflix and Disney. With just 18 million US subscribers as of January, Apple TV+ faces an uphill battle in capturing a significant share of the streaming market.
Apart from the breakout success of “Ted Lasso,” many of Apple TV+’s original shows have failed to resonate with audiences, casting doubt on the platform’s impact on Apple’s overall business strategy. As Apple considers scaling back its content spending, the implications for its services portfolio and marketing initiatives remain uncertain.
As Apple navigates the evolving streaming landscape, the company’s strategic decisions around content investment and audience engagement will continue to shape the future of Apple TV+ and its role within the broader media industry.
