Apple readies $1 billion war chest for Hollywood programming

Wall Street Journal:

Apple Inc. (AAPL) has set a budget of roughly $1 billion to procure and produce original content over the next year, according to people familiar with the matter–a sign of how serious the iPhone maker is about making a splash in Hollywood.

Combined with the company’s marketing clout and global reach, that immediately makes Apple a considerable competitor in a crowded market where new media players and traditional media companies are vying to acquire original shows. The figure is about half what Time Warner Inc.’s HBO spent on content last year and on par with estimates of what Amazon.com spent in 2013, the year after it announced its move into original programming.

And:

Programming costs can range from more than $2 million an episode for a comedy to more than $5 million for a drama. An episode of some high-end shows such as “Game of Thrones” can cost more than $10 million to produce.

The back-to-back success of the original shows “House of Cards” and “Orange Is the New Black” is credited with building Netflix’s business. At the time they were released the company’s annual budget for original and acquired programming was about $2 billion; this year it is expected to spend more than $6 billion.

Personally, I would not judge Apple’s chances here based on shows like Planet of the Apps and Carpool Karaoke. That would be like judging a developer on the apps they write as they learn how to program.

Key to Apple’s success will be setting aside enough cash (which they appear more than willing to do) and ability to bring on board the right mix of people, people with experience and craft. With the hire of Zack Van Amburg and Jamie Erlicht, and the addition of Matt Cherniss to oversee development, Apple has the start of a significant original programming effort.