Last quarter marked the one year anniversary for tvOS and the new Apple TV. Despite selling fewer Apple TVs in the last quarter, Apple CEO Tim Cook is pleased with the platform and expects it to proliferate from the “cable bundle break down”. Apple will also start to offer original video content on Apple TV.
Apple TV: A platform for the future
When Apple reported its record quarter yesterday, Tim Cook commented on the future for Apple TV and original content.
The company sold fewer Apple TVs in the fourth quarter of 2016 compared to the same quarter in 2015. The hardware has not been upgraded for over a year but Tim Cook says that Apple is “pleased with how that platform has come along”.
- ”We started the new Apple TV a year ago and we are pleased with how that platform has come along. We have more things planned for it, but it has come a long way in a year and it gives us a clear platform to build off of,” said Tim Cook.
Like Netflix’s CEO, Apple’s Tim Cook believes that the “cable bundle [is] beginning to break down” and that the trend will accelerate in the coming years. He has previously said that Apples believes the ”future of TV is apps”.
Apple to create original content
Apple has ”dipped its toe” in original video content, Cook added. The company has helped produce music videos on Apple Music and will later introduce new episodes of ‘Carpool Karaoke’ as well as a series about Dr. Dre. Some of these shows will be available to watch later in 2017.
It sounds like this is only the beginning for Apple as it plans to double its “services” revenue by 2012. The “services” category includes the App Store, Apple Music, iTunes movies/music, etc. In the last quarter, the segment generated 7.17 billion dollars. For comparison, that is 3 times as much as Netflix’s revenue but it obviously covers more types of content.
- “In terms of original content, we have put our toe in the water doing some original content for Apple Music, and that will be rolling out through the year. We are learning from that, and we will go from there,” said Tim Cook.
In January, Wall Street Journal reported that Apple has started financing TV series comparable in scope to HBOs ’Westworld’ and that the company is even considering financing movies. Bloomberg reported that Apple is working on debuting new movies on iTunes after only 2 weeks in the theaters.
Tim Cook highlighted three areas that will help drive Apple TV and the tvOS platform – and its revenue – over the coming years.
“The way that we participate in the changes that are going on in the media industry - that I fully expect to accelerate from, sort of, the cable bundle beginning to break down is: One, we started the new Apple TV a year ago and we are pleased with how that platform has come along. We have more things planned for it, but it has come a long way in a year and it gives us a clear platform to build off of. Two, embedded in the 150 million paid subscriptions that I mentioned in my opening my comments, there are a number of third-party services that are a part of that, where we participate economically in some of that by offering our platform, and selling and distributing. Thirdly, we are obviously with our toe in the water, we are learning lot about the original content business and thinking about a way we could play at that.”
Apple has yet to announce a 4K/HDR-capable Apple TV box. The current hardware was launched in October 2015.