Apple - Sony Takeover Predicted as Big Tech Buys Up Hollywood

Rumors about Apple acquisitions are a staple of Internet lore. The iPhone maker is known for its massive cash reserves at nearly $300-billion. It has money to spend and the company has made it clear it's going to muscle its way into video production to support a future video streaming service. But Apple-original programs will need to be nothing less than stellar to compete with Emmy Award winners, Netflix and Amazon.

What’s really at stake for Apple and Amazon going into 2019? It’s getting firmly entrenched into a $1-trillion market valuation. It’s still practically a dead heat between Apple and Amazon as they took turns tipping the $1-trillion scale in 2018. A key ingredients for both companies growth will be online streaming of original productions. When Variety published a list of entertainment industry predictions for 2019, it included the bombshell that Apple will acquire Sony Pictures. The article cites the benefits of Sony’s established film franchises, from its animation studio to properties like Spiderman, Men in Black, Jumanji, Breaking Bad, and the experience of a functional, if troubled, Sony Pictures studio.

Whether you agree with Variety’s prediction or not, it’s interesting that these days, the bar to launching a new video streaming app has been raised. It’s not enough to have the tech, now you have to be a complete television production company on the side, these are truly the best of times to watch TV.

Unfortunately for Apple, it’s targeting one of the most competitive markets in tech today, and failure to launch in the entertainment industry will naturally result in a high-profile embarrassment. If Apple fails to produce any compelling original content, giving up market valuation to Amazon may be the least of Apple’s worries. A wave of duds with the biggest egos in Hollywood that Apple has already recruited will result in negative press from the tech and financial news sources. But that will be nothing compared to the horrors of celebrity gossip columnists going after Apple CEO, Tim Cook in snarky editorials. The humiliation will be vicious and unrelenting, because those people are ruthless.

Apple Must Get Original Content Right, and Fast!

In a world that has reached peak iPhone, Apple must diversify its offering. But it’s not just iPhone that’s suffering. Global smartphone sales worldwide are in decline. A November 2018 report by analysts at IDC shows that the third quarter of 2018 marked the fourth consecutive quarter of declining smartphone sales.

Never before have smartphone users been less inclined to upgrade to the latest offering year-after-year. Analysts predict the stagnation will continue until the widespread adoption of 5G wireless networks, but that isn’t expected until at least 2022. So, Apple will look to video to secure short-term interest in its hardware ecosystem. An Apple original hit may get new users on-board, while sustaining the interest of the Apple loyal.

When Bill Gates popularized the truism, “content is king”, he was talking about software on the fledgling Internet of 1996 and comparing it to the broadcasting business of previous decades. In 2019 software, via streaming digital media, has delivered a wrecking ball to the broadcasting industry. While it’s tough to be a broadcaster in 2019, it’s been a great ride as a viewer. The rise of big tech in the entertainment industry has given us a golden age of television.

Big Tech Buying Hollywood

Television writer and producer, now co-creator of the Ricochet and Glop podcasts, Rob Long put it bluntly in a conversation with Reason magazine’s Matt Welch recently. Long says Hollywood has always been an incomplete business model. The TV and movie industries require outside investment and those investing industries change hands frequently. The latest happens to be big tech.

Long says:

"Hollywood has traditionally managed to refresh itself by suckering other businesses into financing them for ten or twenty years. Then those other businesses get wise and try to get out. Big conglomerates, including the Insurance industry, financed Hollywood through the 50s and 60s, then Coca-Cola in the 60s, 70s and 80s. Sony, a consumer electronics product company (in the 1990s) got in, and is now trying desperately to get out. Now you have big companies with very deep pockets getting in. The truth is, now, Hollywood are the people making movies and TV for Netflix, Apple and Amazon. They're the same people, they just have a different buyer."

Nobody knows for sure what Apple’s upcoming streaming service will look like exactly. But one thing is for sure, following in Netflix’s footsteps is going to be tough. There’s already plenty of choice for streaming apps, each with its share of great original content. Amazon Prime, Netflix and HBO Now are already established with Disney, YouTube, Facebook and even Walmart planning on bringing in new video on-demand services.

Yeah, Walmart. Somehow, the idea of Walmart and chill sounds terrifying.

Apple Music to Apple TV

Apple has already earmarked $4.2 billion on original content production through 2022. But exactly how Apple intends to break into the TV game is still anyone’s guess. One prediction comes from Loop analyst Gene Munster, who says that Apple will rebrand Apple Music into a video content and music streaming service. Apple Music launched in 2015 and it soon integrated its recent Beats acquisition including Beats 1, a popular online radio station. Since 2016, Apple Music has expanded with the introduction of video. With a user base of over 50-million subscribers, it seems like an obvious way for Apple to get a running start at video on-demand, as long as it doesn’t bump up the price for existing users.

A widely predicted strategy for Apple is that it will give away its upcoming video service for free to anyone using Apple products. According to a report from The Information, Apple plans to launch a new streaming TV app as early as 2019 that will be free to iOS devices. An unnamed TV executive who spoke to Recode says that Apple intends to sell a new standalone subscription service, but the exec said it will be priced well below Netflix’s monthly fee. All signs seem to point to a free-to-iOS service that can live on Android and PC as a downloadable app with a subscription, carefully priced to undercut Netflix.

Apple, From iDevices to a Studio

So, how does Apple go from a first-rate, leading-edge hardware manufacturer to content producer of the same calibre? Through acquisition, of course. Rumors of Apple acquiring a studio have been heating up in recent months. The company has been in talks with A24, producers of the multiple Oscar-recognized films Moonlight and Lady Bird. Other studios on Apple’s rumored hit-list includes MGM and Lionsgate. But evidence of interest in Sony Pictures precedes the recent Variety article.

Apple has already leased studio space in Culver City, giving it a physical presence in film-industry country. It has also poached some executive talent from Sony Pictures, recruiting two former Sony Television Presidents, Jamie Erlicht and Zack Van Amburg.

Sony Electronics and Spiderman

To be clear, the rumored Sony deal doesn’t include Sony’s hardware division. Thankfully, we won’t see an Apple-white iPlayStation priced at $2,000 anytime soon. But there may be some relevance to gaming regarding Sony’s tenuous ownership of Spiderman. Spiderman, the star of Sony films and a recent hit PS4-exclusive video game, may go back to Marvel if Sony Pictures is acquired.

The 1997 contract that saw Columbia Pictures (then owner of Spiderman) purchased by Sony, contains a clause that specifies that if Sony is purchased by another company, Spiderman reverts back to Marvel Enterprises, now owned by Disney. So, it’s unlikely Spiderman would be included in an Apple deal. As a comic nerd, I’d rather see the Marvel universe united under one brand and avoid coming under Apple control. So, if an Apple-Sony deal happened, and Spidey reverts back to Marvel/Disney control, it’s likely the end of any future Spiderman games as Sony PlayStation 4 exclusives.

Apple Content

It’s difficult for a middle-aged geek like myself to get excited about potential Apple-exclusive productions. If the company’s existing content and celebrity partnerships are any indication of what an Apple TV Network will look like, it’s looking grim. Apple has already released samples of original shows on its Apple TV service that demonstrates Apple scraping the bottom of the entertainment barrel with two reality shows with Carpool Karaoke and Planet of the Apps. The former provides a dashboard-cam view of celebrities singing in their cars while the latter is a Shark Tank-style show for app developers instead of entrepreneurs. So far, both of Apple’s original content efforts look like snooze-fests and they’ve been mostly reviled by critics online. Planet of the Apps sound particularly terrible because one of the celebrity judges turns out to be Goop pseudo-science swindler, Gwyneth Paltrow. Her online retailer, Goop is to health and well-being what overpriced, exotic cables are to audio. I know Apple probably isn’t interested my “misanthropic middle-aged nerd” demographic, but when it comes to Paltrow, if Iron Man ain’t in it - I ain’t interested.

But Apple has been working hard to secure deals with other names in the entertainment industry too, including Oprah Winfrey, La La Land director Damien Chazelle, Reese Witherspoon and Jennifer Aniston. Given the list of talent and ideas Apple has put forth so far, it doesn’t seem like Apple is serious about luring anyone over to iOS devices for the free TV. But there is one point of interest for a middle-aged nerd like myself. Apple announced a remake of Steven Spielberg’s 80s science fiction anthology show, Amazing Stories. The show will be based on Isaac Asimov’s Foundation novel series, that sounds promising. And then there’s Apple’s deal with DMH Media that will let Apple make new Peanuts cartoons.

At least there’s a ray of hope for Apple content, but it sure doesn’t sound like I’ll be switching over to the Apple ecosystem anytime soon.

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