Wednesday, December 28, 2011

Can Apple Become the Next Big Content Creator?

The status quo for visual content has always been that its creation, delivery and consumption have clearly delineated borders. Content creators make it, cable providers deliver it, and viewers consume it on the big screen in their living room.
In the last few years, however, we’ve seen a fundamental shift in the visual content landscape. For the first time since the advent of cable television in 1948, the lines are blurring as the quality of content created by non-prime networks — and even individuals — continues to improve. Plus, content increasingly reaches us over the Internet, consumed on whatever screen we happen to be in front of.
As rumors about an Apple television continue to gather steam, many believe that a content package of some kind will be part of any new iTV offering.
Yet for potential content creators like Apple, formidable challenges lay ahead, for instance, when it comes to attractive subscription packaging. And license holders are loathe to upset the traditional TV network model with its predictable payment model. What else lays ahead?

Who will Control User Experience?

According to recent reports, Apple could be developing a new TV (or line of TVs) that will likely carry a premium price tag and new content consumption options. This type of situation could leave a significant portion of consumer experience outside of Apple’s control. (Although, it’s not the first time Apple’s user experience has fallen outside of its control: iPhone service is controlled by cell phone companies.) So Apple may find itself at the mercy of the content creators who are licensing their content in new ways.

Apple as “Content Facilitator”

Perhaps it’s time for Apple to get into the content creation business and license its own content. Imagine if the company approached a number of successful producers and convinced them to create an Apple series, for instance, “TV Series X by Steven Spielberg, exclusively on iTunes,” or Quentin Tarantino, or Tom Hanks.
However, “content creator” doesn’t imply that Apple become the new Disney. “Content facilitator” is the more accurate descriptor, suggesting that Apple target other established, successful creators to generate compelling content that Apple would then exclusively distribute.

Exclusive Content will Drive Hardware Sales

To be sure, Apple will still need ongoing participation from traditional content holders. After all, any new content consumption package will have to include access to Glee, Grey’s Anatomy and other popular programming. But if Apple succeeds with compelling content, its exclusivity will help drive hardware sales, particularly if Apple actually releases a TV. And driving hardware sales is one of Apple’s primary goals, according to Steve Rubel, EVP at Edelman: “Seems like Amazon and Apple are really opposites. Amazon uses devices to sell more content. Apple uses content to sell more devices.”
Yes, it will be costly for Apple to develop its own content, but the company has plenty of cash in hand. Plus, non-traditional content holders have already begun acquiring content; see Netflix’s recent resuscitation of the popular Arrested Development series, and its acquisition of Fincher’s House of Cards, for which the company outbid HBO.
What I am suggesting, however, is that Apple take it further than Netflix by applying Apple development principles/excellence to content creation. That is, Apple pursues exclusive content development, then applies its high standards of excellence to the process of content creation.
For Apple, succeeding in any way with content facilitation will be a step toward loosening the grip content licensing has on the holistic user experience. The company will need to:
  • Drive hardware sales. Apple will need to generate exclusive content, accessible across the full spectrum of Mac/iOS devices. Plus, a new Apple TV will drive new hardware sales and increase stickiness for existing customers.
  • Create control with user experience. If the content is compelling enough, Apple will succeed in challenging the control license holders currently hold over the Apple user experience, at least as far as content consumption goes.
Those who insist Apple is outside of its wheelhouse and should leave the job of content creation to traditional creators need to realize the potential of future content practices. As Steve Jobs pointed out, things are the way they are only because people no smarter than you said they are.

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