Apple Plans to Give Away Original Content for Free to Device Owners as Part of New Digital TV Strategy

Apple is preparing a new digital video service that will marry original content and subscription services from legacy media companies, according to people familiar with the matter

What to Know

  • Apple is planning to mix free original content with subscription "channels" to existing digital video services on its "TV" application
  • Apple is looking for PG-rated series that could eventually be tent-pole franchises for a future digital video service

Seven years ago, Walter Isaacson wrote that Apple founder Steve Jobs told him he'd "cracked" the code on bringing television into the digital age. 

Seven years later, the world is still waiting. But Apple's not giving up, even if it isn't revolutionizing the industry. 

Apple is preparing a new digital video service that will marry original content and subscription services from legacy media companies, according to people familiar with the matter. Owners of Apple devices, such as the iPhone, iPad and Apple TV will find the still-in-the-works service in the pre-installed "TV" application, said the people, who asked not to be named because the details of the project are private. 

The product will include Apple-owned content, which will be free to Apple device owners, and subscription "channels," which will allow customers to sign up for online-only services, such as those from HBO and Starz. 

Apple plans to debut the revamped app early next year, the people said. An Apple spokesman declined to comment. 

As Bloomberg reported in May, the subscription channels will essentially copy Amazon's Prime Video Channel subscriptions. Customers will be able to access all of their content from within the TV app so they won't need to download individual apps from multiple media providers. 

Apple is spending about $1 billion on original content this year, targeting "PG-rated" shows that appeal to wide audiences and won't get the company in trouble by making them available for free to owners of all devices, said the people. Apple is also looking for "tent pole" franchises that could serve as linchpins to a paid Netflix-like subscription service down the road, two of the people said. Think "Game of Thrones," but without the sex and violence. The Wall Street Journal reported last month Apple has about 24 original shows in production and development. 

Media companies are wary

Finding those types of shows — wholesome series that can also have widespread appeal — won't be easy. 

Apple has long struggled to reach deals with large media companies, which have been hesitant to hand over direct consumer relationships to the tech giant. The collapse of the music industry, which some media executives blamed partly on Apple's industry-defining 99-cent price for single songs, has hampered Apple's attempt to push forward cable TV to a more consumer-friendly product. 

Apple's current software and services chief, Eddy Cue, in particular, earned a starring role in Apple's push toward selling individual songs, which helped kill album sales and ushered in the era of streaming music. As a result, media executives have been reluctant to let Cue and CEO Tim Cook access their prized video content to repackage it in ways that could disintermediate the lucrative cable bundle. 

This time, Apple is counting on someone who knows legacy media companies to lead the charge. Peter Stern, who joined Apple in 2016, has been tasked with striking contracts with media companies to put together the service, said people familiar with the matter. Stern, who reports to Cue, was Time Warner Cable's chief strategy officer. He eventually helped sell the company — first to Comcast (a deal that got blocked by regulators) and then to Charter. He left in 2016 after Charter's takeover closed. 

Coming from the cable TV industry may help Stern hammer out deals that will give Apple's TV service top content while not scaring off executives who still fear Apple's control over the industry. 

Apple is also trying to persuade executives of print media companies to join Texture, the company's digital magazine product that it acquired earlier this year. Stern is also in charge of acquiring content for this effort and has had some difficulty persuading news organizations to give Apple control of the subscriber billing relationship, according to people familiar with the matter. Keeping direct control of customers' purchasing decisions gives companies more ways of preventing them from canceling services (or adding new ones).

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