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Life after iTunes: Apple’s big media challenge

Like the entire large tech companies, Apple is spending billions to provide unique video content material because it builds its position someday of media, but it surely faces loads of demanding situations in its try.

The revolution will probably be televised

Giant avid gamers, together with Google, Apple and Fb, desire a slice of the $170 billion/yr U.S. TV marketplace.

They’re prepared to speculate deeply to seize their piece of the pie. That’s the considering of Needham & Co analyst Laura Martin in an in depth shopper analysis word equipped to me, “The Long term of Media – an Epic Fight.”

In doing so, they hope to milk converting viewing behavior as viewing audiences use social networks and smartphones to get right of entry to expanding amounts of video — those converting viewing behavior are a large alternative for those disruptive companies.

It’s fascinating that 16 years ago today Apple launched iTunes. At that time, consumers wanted to own content. Today, consumers are happy to rent it, and that’s part of what drives Apple to seek new ways to make its services stand out.

When it comes to regulation, tech firms have a window of opportunity. Martin points to the recent Department of Justice decision to block the AT&T/Time Warner merger as a suggestion that regulators have a blind spot to the impact of the big tech firms as competitors.

Tech firms are already spending huge amounts of cash on creating original video content designed to weaken the connection between viewing audiences and existing incumbents in the space.

This battle for the future of media means tech firms will buy the large studios, she argues. (Once again, Steve Jobs was way ahead of his time with the 1986 acquisition of Pixar, I might point out.)

The search for ‘chemistry’

I’d also argue that some tech firms will find it hard to loosen up enough to create the greatest content.

Would family-friendly Apple be institutionally capable of creating shows with the kind of challenging adult themes that drive the most successful TV and movie franchises?

Could Apple make The Wire, or Google create Zeitgeist? Is its ambition for content creation really going to be defined by Carpool Karaoke and a show about real estate?

Such institutional challenges lead me to anticipate tech firms will inevitably spin out their content creation arms as separate but wholly-owned entities. Martin agrees:

“We believe that what makes a great creative culture is very difficult to replicate and it has little to do with money,” states Martin. “Anyone in Hollywood will take your money, and they each believe they have the next Forest Gump or Pretty Woman or Wedding Crashers.

“However, 1 out of every 10 TV series or films is a hit and most of the others are written off. Netflix’s track record of making hits vs. B and C titles is worse, despite its enormous data trove advantages. Cash isn’t what makes the difference between making hits and non‐hits, nor is data. It’s much harder chemistry than that.”

The search for this chemistry is what makes the acquisition of existing content creation firms by tech firms more likely.

Apple is certainly assembling a team around this project that has the industry chops to lead this business.

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