Although it can't be denied that hardware is still the biggest driver of Apple's revenue, but the same can not be ignored is the fact that Apple's smartphone sales growth has gradually slowed down.
In contrast, Apple's content business has broken through the cyclical cycle that Apple is generally facing at the profit level, and has achieved growth in the past five quarters. Service revenues, including content services, have also increased in revenue.
Today, content is Apple's second-largest business. According to CNN data, Apple's service revenues (including Apple Music, iTunes, and iCloud) have reached $27.2 billion in revenue over the past year, in the top nine of this fiscal year. It rose 27% in the month, much higher than the 15% increase in iPhone sales.
In the previous concerns, we also found that with the increasing proportion of revenue from service-related revenues, Apple is consciously cultivating content platforms and gradually accelerating the pace of attracting users to stay in Apple's ecology from a new perspective, in an effort to Consumers lead a series of services for Apple's newly developed applications, games, and video content —— from inviting star teams to develop original film and television content, to Apple Music's independent music publishing department and music list, to the acquisition of electronic magazines Business Texture and other initiatives.
The service product ecosystem of "platform + content + software" is gradually emerging. The test for Apple seems to be slowly turning into the ability to transform from "hardware users" to "digital subscribers", as well as the seamless integration of digital content development and hardware development. Ability, ie "more than iphones".
Apple's increased investment in the development of "more than iphones" services has two important reasons: on the one hand, the high revenue from recurring service revenues; and secondly on the fact that service businesses are not as susceptible to seasonal fluctuations as hardware.
Apple also knows that it can rely on a large and loyal user base to boost service business growth. For example, in streaming services, given that the market price range of OTT streaming services is between $10 and $15 per month, if Apple can grow video subscribers to At a level comparable to Apple Music (40 million paying users) then this may represent an increase of $400 million to $600 million in revenue per month for Apple.
Apple CEO Tim · Cook said at the Q3 conference call, "We think the trend of trimming will accelerate, and it will be much faster than most people expect", suggesting that Apple is accelerating its layout in areas such as video services. Motivation.
In general, Apple's services include Apple Music subscriptions, iTunes media and iCloud storage. Our focus will be on the content level. From the current scale and system content, streaming video and music have always been in a strong relationship of rising and rising. Apple Music carries both audio services and Apple original content.
This article is Apple: "More Than iPhones" strategy. The main focus is on original film and television services.
Apple's feature "More Than iPhones" video content observation
Original film and television service Apple Worldwide Video officially launched in 2019
Since the initial explosion of Apple in 2018 to develop original content for $1 billion, Apple has experienced the establishment of a new entertainment content studio (Apple Worldwide Video) in Hollywood from scratch, expanding its recruitment to more than 40 people.
So far, in addition to the two original variety shows, the platform has signed 16 new original TV programs, and 6 other TV content are under development, mainly based on plot, comedy, and fantasy TV content. If implemented as originally planned, Apple will have more than 40 original content in the spring of 2019 (around March), including adult-oriented TV dramas, children's programs, and local content for European and Latin American markets.
At the end of August, it was reported that in order to promote original content, Apple's new marketing team is already actively building.
1. TV content: plot, comedy, fantasy adventure
From the list of currently published content, Apple's original content focus is clearly tilted towards TV content (not movies). Producers and media commissioners who talked with Apple said that Apple hopes that the content style will retain Apple's consistently positive and optimistic brand image. In other words, content development will circumvent heavy social issues or dark topics, from currently published projects. It seems that women's drama TV series, family animation series, documentary film, science fiction theme, and generally fit this direction. With the signing of Apple creative talents, the content type expansion may be more extensive in the future.
Apple is not interested in making HBO and Netflix similar styles. The company wants to provide the first few works to all users with Apple devices, most likely through its TV application, and Apple content executives also expressed the development of universality. The content appeal is similar to NBC's popular family drama "Our Day" and the family story "Amazing Legend", or the theme of adventure.
At the recent Primetime Emmy Awards, Apple's original show "On-board Karaoke" (which appeared in the iPhone 7 release notice) became the winner of the short variety unit, which is the first time Apple's original content has won an award for creation. For the team, at least the feasibility of the type style is initially confirmed.
2. Movie Content: Family Car Animation and Documentary
Apple bought two films at the recent Toronto Film Festival (TIFF), both of which added their original content inventory. The two films are typed in an animated film and a natural documentary. The family's fantasy animation "Wolf Walkers" was produced by the Oscar-nominated Irish animation studio Cartoon Saloon. The studio also produced a well-known animated film "Under the War Xiaohua, "The Secret of Kyle", this cooperation Apple also revealed the intention to win the Oscars; another natural documentary "The Elephant Queen" by British actor Chevat · Ai Qiaofu voice (except Apple, Actively developing and enjoying streaming content, Amazon also sent new entertainment content representatives to Toronto to purchase excellent films, and expressed Amazon's expansion of film content and increased willingness to participate in film investment.
However, in contrast to the gorgeous original TV program lineup, Apple's action on the content of the movie is much more conservative. At present, apart from the purchase of the content, the platform has not specifically disclosed the content of the movie specifically included in its own streaming media service.
Original content strategy
1. Celebrity + Classic IP
In addition to "mainstream" and "experienced" as screening criteria, in the creation of content, Apple has taken a more conventional strategic route, namely, first, signing celebrities; second, looking for classic IP.
This includes the —— mentioned in the previous period with the director Spielberg to remake the "Amazing Legend", "The City of Magic City" directed by Damian · Shazeler made a drama, "Split" Director Knight · Shamaran collaborating psychological thriller, signed 3 TV production agreements with well-known actors and producers Raychem · Witherspoin's company Hello Sunshine and invited to Jennifer · Aniston joined the cooperative drama comedy In addition, in order to ensure the quality of content production, the established global video department (Apple Worldwide Video), from the Sony TV and television production department, dug two executives who participated in the production of "Breaking Bad" and "Dragon Crown" as the new content department. The leader, and quickly equipped the core genre and executives of TV content studios such as Amazon and Hulu for the subdivided content genres and types.
In the process of following up on its content strategy, we also found that Apple’s signing strategy of embracing the celebrity effect has not been relaxed. For example, in June, it signed a multi-year content cooperation agreement with the well-known host Oprah and the work of making Sesame Street. The studio signed a series of live-action animation and puppet animation content agreements, starting from the individual (actor, director, screenwriter, studio), based on existing topic effects, fan gathering to promote word of mouth IP development, focusing on classic drama, best-selling novel adaptation, at the same time Encouraging content that highlights the creator's personal characteristics is also quite different from Netflix's approach to discovering new people and new IPs and quickly quantifying content.
2. Heavy gold bundled multiple seasons consecutively signed
Behind the "Halo" partner, Apple has adopted the "all in" approach to original content, taking a large-scale, multi-year, multi-series (multi-season) cooperative signing style.
From October last year to March this year, 3/4 of Apple's film and television works were signed in multiple seasons, skipping the regular pilot stage and developing new programs in a more aggressive and risky manner. For example, with Reese · Witherspoon and Aniston's talk show, Apple signed 20 orders directly and promised to build the show for $240 million.
In June of this year, Apple also signed an additional agreement with the American Writers Association (WGA) for platform program production, and promised to promote the content of the platform free play, saying that it would provide reliable income protection for the scriptwriters who serve Apple's original content, even if it is A drama in the free trial stage.
Apple's adoption of such measures is also of great significance for securing future sustainable creative sources. The agreement will continue until 2020 and will be applied to 14,000 WGA members. Apple has taken the lead in establishing credibility to attract creative talents to join hands and protect content. The source lays the foundation. Perhaps for Apple, the greater significance lies in relying on the brand effect of poor globalization, the willingness and financial resources to invest in content, attracting more top content production teams and creative talents to turn to Apple's content development workshop, in the long run. More direct and exclusive cooperation with Apple.
Today, most mainstream media companies are launching their own streaming media content, such as the recent "Dynamic Cosmos" exclusive theme streaming service released by Warner Bros., Disney's upcoming Disney Play, and only 487 original networks in the US in 2017 alone. The program is on the line.
By the end of 2018, this number is likely to exceed 500; whether it is Silicon Valley content players or traditional cable TV, they are all in a heavyweight stream of video content to gain a place.
The deadline for Apple's service business to double to reach $50 billion in revenue by 2021 is getting closer and closer, and the industry has speculated that the depth and richness of Apple's video has just begun.
However, although the content purchase is very positive, Apple's original program has been slow to produce, and Spielberg's new version of "Amazing Legend" and Reese · Witherspoon's morning talk show due to personnel changes and scripts respectively The problem has delayed the progress, and the more conservative promotion has revealed a higher demand for quality.
A brief view of the competitive landscape of streaming content
Roughly speaking, the current growth rate of Netflix users is slowing down, and the service adjustments that HBO may face in AT&T and Warner acquisitions, or the gap in video subscriber growth for Apple content services.
At the Q3 earnings conference in July, Netflix announced that in the third quarter, the number of paying subscribers increased by 674,000, the growth rate was far less than the expected 1.23 million, and its international market subscriber growth was not satisfactory, which immediately reduced the company's next quarter. Goal, although this does not mean that Netflix is in a downturn, it does show that Netflix is starting to face some growth restrictions (related links: users are not up to expectations, stock prices are falling, NetflixQ2 earnings executives Q & A: performance is still strong, just not enough stellar), there is analysis It is argued that if this trend continues, the space left for Apple to acquire subscribers may increase.
At the same time, with the acquisition of Time Warner by AT&T, the development of HBO under Time Warner also has uncertainties. A report by the New York Times on July 8 stated that AT&T is high. John · Stanky held a meeting with HBO employees to clarify AT&T's vision for HBO.
According to reports, Stanki said to HBO employees that "this will be a tough year. There are still a lot of work to be done to change the direction." The number of subscribers to increase HBO and the time to watch their programs have also made the outside world guess HBO. It seems that I want to make more content with less budget than now, so that the market is saturated (related links: HBO is being pressured by AT&T: "Quality Head Content" strategy will be replaced by "More Content", the goal is to shoulder Netflix). Given its appeal to attract more attention in a very short period of time, HBO's strategy seems to be more similar to Netflix, or to weaken quality in the process of increasing production and to emphasize topicality, given Apple's current high level. The content lineup, Apple Original may be able to take this opportunity to achieve breakthroughs in the direction of high reputation and quality content.
Overall, Apple's original content is built on platforms and products, but creating successful products and producing popular content are two different things. This is also evidenced by Microsoft and Yahoo, which are trying to create original content. Now both of them have to give up the original plan after long-term layout. In addition to the market concerns of the content development and the long-term, the outside world is developing content for Apple. The general question is that it is difficult to break through. Even Murdoch is not optimistic about the fledgling apples in content production. Some people think that compared with Netflix, Amazon, Google's YouTube, and gradually build streaming services. HBO, CBS, Apple's original is actually too much behind, too late.
However, from the development of Apple Music streaming music and the current situation, Apple's conservative attitude to video layout does not mean that there is no opportunity to change the game landscape, after all, compared with other content players, less revenue pressure and 13 The advantage of billions of active devices in the market penetration is also reflected in Apple's development of content business.
This article is Apple: "More Than iPhones" strategy article. The main focus is on aggregated digital content services such as news publishing and music.
Apple's feature "More Than iPhones" aggregated digital content observation (middle)
Digital magazine aggregation service, enhanced online information subscription package
1. Attracting mainstream news publishers to join Texture Digital Magazine Aggregation Service