Can Steven Spielberg help sell iPhones? Apple is betting on it.



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By Dylan Byers

When Tim Cook unveils Apple's new streaming service on Monday, the iPhone maker will join a growing number of media, technology and telecom companies vying for top Hollywood talent.

But Apple is not trying to take Netflix. Instead, Apple hopes to develop a much more lucrative business: the iPhone and its other devices.

For a company with huge success, Apple faces a serious headwind. The growth in sales of its main product – the iPhone – has slowed down largely because it's sold too well. Apple has saturated the market and it is becoming increasingly difficult to force owners of old iPhones to buy new iPhones, upgrades that were an important part of the company's business.

As a result, Apple is now focusing on services, a great term for software that makes owning an iPhone so valuable: music, information, fitness tracking, mobile payments, and so on. By strengthening these services, possibly in one convenient package, Apple hopes to consolidate its user base and get people to spend more time with its product while spending a few extra dollars.

And to do this, he will associate with Hollywood. On Monday, Apple is expected to announce a new showcase for streaming services from recognized readers such as HBO and Showtime. But in addition to that, Apple will superimpose its own original high-quality video content, much like the Amazon platform. The division, led by Sony Pictures Television's Jamie Erlicht and Zack Van Amburg, has signed agreements with top talent such as Steven Spielberg, J.J. Abrams, Reese Witherspoon, Jennifer Aniston and Kevin Durant.

This is another Apple service, but it may be one of the most useful if Apple can produce only a handful of programs "must see". As Matthew Ball, former head of strategy for Amazon Studios in May 2018, wrote, "Video remains the most consumed and valuable media category in the world, and it also generates attention and fans. oversized (and recurrent) ".

But what this video did not generate is a profit. Neil Cybart, an analyst who writes about Apple on his website, Above Avalon, wrote that the economy of streaming media remains difficult for companies like Netflix that focus solely on content.

"Dedicated streaming music and video players will ultimately need to prioritize profits and revenues," wrote Cybart. "However, Apple has the luxury of not having a profit as a motivator behind its content distribution arm."

It's a calculation that the leader of the Amazon, Jeff Bezos, has also done. Bezos did not create Amazon Studios and paid out $ 250 million to acquire the rights to "The Lord of the Rings" because he wanted to dominate Hollywood. he did it so that more people would sign up on Amazon Prime to get that content, and then end up ordering toilet paper and laundry detergent from Amazon.

Apple, Amazon and AT & T do not need to produce original content using a Netflix-level clip, nor acquire major franchises, such as Disney's Marvel and LucasFilm, for justify their incursions into Hollywood. It will be enough to provide a little more added value to convince consumers to buy an iPhone instead of a Samsung or to register on Amazon Prime instead of going to it. ;grocery.

That said, it will still not be easy for Apple.

"The content is difficult," Ball said in an email to NBC News. "It takes time to acquire expertise, a solid content pipeline and understand what the audience wants from you (compared to what you think it wants)."

An open question is whether Apple's offerings will be available to non-iPhone users on platforms such as Google's Android mobile operating system, Roku streaming devices, and mobile devices. Amazon.

Rich Greenfield, a media analyst at BTIG Financial Services Company, said there were advantages and disadvantages to making the service accessible beyond Apple.

"If Apple wants to maximize the scope of content creation, it should," writes Greenfield in a scorecard. "On the other hand, if Apple wants to promote the adoption of its own hardware, limiting access could be useful – as long as the content is so powerful that it determines the choice of your device (it's a big if). "

Powerful content is exactly what Apple's talent range offers. If a company has to bet on a Hollywood director to persuade people to buy his product, she could do a lot worse than Steven Spielberg.

Daniel Arkin contributed.

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