Right about now Tim Cook is probably wishing Steve Jobs hadn’t sold Pixar to Disney. Think of the arsenal of content and iconic characters not to mention the head start it would now have versus its tech peers (i.e.: Amazon and Netflix). Instead Apple is playing catch-up in an ever escalating content arms race. The first salvo Apple fired was back in June with the hiring of two former Sony execs to start up video programming positions that didn’t exist before at Apple. And now, after Netflix upped the ante by signing hit maker Shonda Rhimes, Apple has reportedly set aside $1 billion to invest in the creation of original content. BOOM? No, not really. Because that was the same amount that Amazon invested 4 years ago when it started up its original content machine and a pittance compared to what both Netflix and Amazon are projected to invest on programming this year ($6 billion and $4.5 billion respectively). BUT, Apple has a built-in advantage that neither Netflix nor Amazon can match. The iEcosystem. Sure mobile phone sales have been down with a modest uptick recently but the penetration of Apple devices in homes is unmatched. Consider those devices the not so hidden Trojan Horse that can do a number of things for Apple:
Number 1; It could borrow a page from Microsoft and have their streaming service with their content force loaded onto all new devices and placed on older devices via an OS upgrade. What does that mean? Well, if you ask anyone at AOL or Netscape it means that just like Microsoft Explorer became the default internet browser for many users so could Apple’s content streaming app. Which leads to number 2; Apple blocks competitive content streaming apps from being able to be downloaded or makes them reeeeeally hard to use (see constant crashing). This could probably lead to anti-trust claims and given that Apple was on the other side of those debates I would imagine they would steer clear BUT ye never know! And then there’s door #3; where Apple forces not only content creators like Netflix and Amazon to have their content on the Apple content app (iMedia maybe?) but also companies like NBCUniversal (part of Comcast) or ESPN (part of Disney) making it the ultimate reason for cord-cutting because not only would users get all the content they want via the Apple app but they could get it streamed across all their devices from their iPhone, to the iPad to their Mac. Which would then mean that we would want to reevaluate that initial payment of $1 billion dollars and redefine it as more of a down payment because Apple may not even have to actually create a ton of their own content and instead leverage the iMedia app in a similar manner as iTunes.
Back in the day Amazon used to sell books but it also had a strategic approach to broaden it's portfolio. That was to establish a seemingly non-hostile relationship with brick & mortar retailers like Toys 'R Us (see bankruptcy), Borders Books..etc. The goal? To get in front of the customer interaction. Amazon sold itself as an expert in the digital space and allowed for cost efficiencies (i.e: not having to build out a web-site or deal with the head-ache of how to fulfill product or the logistics on from where) from the brick and mortar company to focus on what it did best (selling in a physical store) while letting Amazon manage it's digital footprint which was a low volume mix relative to the traffic that was walking into the brick & mortar stores on a daily basis. But, as we all know now, by insinuating itself in the path to purchase and putting its brand in-between the customer and the brick & mortar brand Amazon was able to create a wedge that has grown
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