Cupertino, we have liftoff.
Twenty years ago, with three simple words, Steve Jobs changed the way the public saw Apple. One more thing … read the screen at the end of his Macworld Expo keynote speech in San Francisco that January. It was actually five more things—blueberry, grape, tangerine, lime, and strawberry, the colors of the new translucent iMacs he announced—but the construction stuck. For the next 12 years, the line became Jobs’ catchphrase, the showman’s wink at Apple’s cycle of secrecy and surprise.
By the time Tim Cook replaced Jobs as CEO in 2011, Apple had thrust most of its best secrets into daylight—iTunes, iPhones, iPads—but one rumor Cook could still dance around was the company’s plans for television. (Apple had released a Macintosh back in 1993 that could display a TV feed, but the curio lasted only a few months on the market.) Industry watchers had long wondered what the company might have in store. “Intense interest” became Cook’s favorite side step—as in, TV was “an area of intense interest for us.” In those days, he was referring to the experience of watching television. The Apple TV set-top device, which launched in 2007, was beginning to gain some sales steam by its third generation, and the company was widely believed to be prototyping an Apple-branded TV set.
Over the years, though, Cook’s intense interest began to shift. According to The Wall Street Journal, Apple approached Time Warner about acquisition in mid-2016; some even suspected the company might make a bid for Netflix. Neither happened, but by then what was once called “web television” had come into its own, and streaming content took on a new urgency. Amazon had won multiple Emmys for its original show Transparent, and Hulu had evolved from a platform that just delivered the previous day’s cable shows to one with its own slate of original programming.
Apple seemed ready to jump into the pool. Cook began trumpeting the performance of the company’s “services” division, which included iTunes, Apple Music, Apple Pay, and the App Store. Services were by then second only to the iPhone in generating revenue for Apple, and Cook said he saw more growth for that group ahead. Part of it, it seemed, would come from television; Apple quietly began filming Vital Signs, a show based on the life of hip hop legend Dr. Dre (cofounder of headphone maker Beats, which Apple bought in 2014). The show, which reportedly contained sex and violence, would be watchable via iTunes and Apple TV boxes. Soon, Apple also developed a Shark Tank-style reality show called Planet of the Apps, which the company began casting in the summer of 2016; then a series based on Carpool Karaoke, a perma-viral segment from James Corden’s late-night CBS talk show.
In October 2016, during a quarterly earnings call with investors, Cook’s rhetoric finally changed. When an analyst asked him about the productions, he responded: “I think it’s a great opportunity for us both from a creation point of view and an ownership point of view.” Mostly tap dancing, to be sure, but “creation” and “ownership” were new words in Apple’s vocabulary. And none too soon. Not only would Apple miss its own revenue target in 2016, in large part due to slowing sales of iOS devices, but its share of the movie-rental market—which, thanks to iTunes, had been more than 50 percent—was tumbling, cannibalized by smart cable boxes and Amazon. Apple’s services division needed an extra boost if it was going to help the company offset such setbacks.
Source: Inside Apple’s High-Flying Bid to Become a Streaming Giant
By Peter Rubin
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