Last week I talked about the coming of the super bundles. The overall arc of that piece was more about what super bundles are and why consumers will be drawn to them over traditional cable packages. Throughout the article, I mentioned some companies were positioned better than others, namely Amazon and Apple. In the recent days, Apple’s strategy here is becoming more clear. And, this recent piece in The Information seems to confirm my prediction that Apple would indeed launch a super bundle.
My conviction has always been the bundle would not go away but would evolve and more specifically who you pay for content bundles would change. Apple and Amazon already have billing relationships with ~100 million US consumers, more when we look worldwide, which makes it very easy for them to convert customers to their bundled media and entertainment offering. Both companies are also in a very privileged position to also be able to market their bundle, as well as all their exclusive content, in better more effective ways than TV networks ever could.
This point is highlighted by a Hollywood executive in this great article from The Wrap. This part specifically:
“One of the terrifying things is how easy it will be for Apple to promote their own stuff. They already have a pretty remarkable infrastructure,” said one film studio executive, pointing out that devices like the Apple TV exist solely to organize and streamline content from third parties.
The ability to have success economically, either in driving subscriptions or in Apple and Amazon’s case, help the entirety of their ecosystem, is a huge part of being able to justify the steep costs for original content. Both Apple and Amazon have many other revenue streams which make it easy to fund any losses in media until they reach scale. They have the scale built in since their customer base is so large, all they really need is a steady stream of quality original content.
One other part of the article stood out to me:
But the manager said Hollywood talent loves Apple for paying their asking prices and being eager to compete.
“They’re paying real quotes and not trying to squeeze us for less and less the way the studios are on the network side. They’re formidable buyers,” the manager said.
This is a slight departure from how Apple handled music deals. I have many friends deep in the music industry, and the love-hate of labels about Apple was tense for a while. Apple negotiated heavily and was in an advantaged position to do so. Those tactics won’t work in movies and TV and it seems their coming from a position of willingness to pay vs. the incumbents who are acting like the Apple of old with their negotiating tactics is sending talent to Apple’s doorstep in herds to pitch their content ideas. A positive place to be if building a robust offering of exclusive content is your ambition.
While Apple’s 1 billion dollar budget for content is quite a bit smaller than Amazon’s budget and Netflix’s, my conviction is they are in the market for one big hit and then scale from there. The wildcard for me, with both Apple and Amazon, is still streaming TV. I still find it interesting that Google has a streaming TV service in YouTubeTV and neither Amazon or Apple has one. There is no technical challenge here it is simply money. If Apple paid networks for the rights, they too could have a streaming TV package.
A theory could be both Apple and Amazon view the traditional TV networks as competition and therefore aren’t interesting in paying or syndicating their competitions content. Another theory could simply be they feel the current streaming TV packages from Hulu, YouTubeTV, etc., do a sufficient job. Or perhaps, they believe what I hypothesized in last week’s article, that the traditional TV network bundles will become commoditized and therefore not where they feel the best return on their investment will come from. Following that logic, if true, then all their investments will be on exclusive content which is basically the same way a network operates philosophically.
I alluded to this point in my Super Bundle analysis, but even in an era of super bundles we still will have a lot of subscription options which, some fear, could lead to subscription burn out. I don’t doubt this dynamic, but the reality is today’s consumers balance a range of subscriptions already. These super bundles will consolidate some of those subscriptions which I think will help the possible “death by subscription” dynamic.
Competetively, this is all extremely positive for consumers. Not only because bundles are great, and the more competition there the better, but when I take a step back and look at the vast amount of quality content out there it seems that since Netflix and Amazon started making great original content that the overall quality of entertainment has gotten even better. And we humans love to entertained and it seems as tech companies get into media we may see another golden era of media and entertainment.
