Apple Inc. (AAPL)’s Foray into Original Content Creation Could be a Threat to Netflix,

Apple New York Store

As per sources, Apple Inc. (NASDAQ:AAPL) is in preliminary talks with Hollywood executives regarding partnerships for a planned development and production division. Industry watchers, as well as potential rivals, have been anticipating Apple’s foray into content creation for a long time now. Apple already hawks films and television show downloads via its iTunes store.

A streaming service delivering original programming, which would compete with, Inc. (NASDAQ:AMZN)’s Amazon Prime and Netflix, Inc. (NASDAQ:NFLX) head on, could be advertised as an extra to the new Apple Music service, which attracted 11 million trial users a month subsequent to its launch. Apple is seeking an executive to helm its proposed new production and development enterprise.

CEO of Manatt Digital Media, Peter Csathy observed that it was not a matter of whether Apple would venture into content creation but of when the tech giant would do so. Apple is a latecomer to the video industry. The company has much more competition than when it entered the digital music domain. However, Apple has a significant advantage in that most of the hardware the public utilizes to consume content is owned by the tech company.

Netflix survives and makes profits purely on content. However, Apple’s revenue is obtained by selling hardware. The services can be viewed under the category of marketing expenses. As Apple controls a sizable number of devices users utilize to access Hulu, Amazon and Netflix the tech giant could easily create hurdles for the companies in the eventuality of them becoming direct competitors.

It’s too early to assess how alarmed Amazon and Netflix should be about Apple’s entry. The streaming video industry has many players, and it can’t be said how much market share a major new company can corner.

A potential growth area for Apple is independent film. Amazon is also looking at the latter and enjoys the leadership of Ted Hope a highly acclaimed independent film maker. Unless Apple hires someone as famed, Amazon will have the edge of a friendly and familiar personality to approach content creators and independent production entities for possible partnerships.

Sources: forbes, independent