Personal Finance

Apple, Inc.'s First 2 Original TV Shows Are Almost Here

iPhones using Apple Music

Investors have known for quite some time that Apple (NASDAQ: AAPL) is pushing into original content , primarily as a way to differentiate its Apple Music service from rival music streamers. Apple has been investing in a handful of new TV shows that will be exclusive to Apple Music, and the first two are almost here.

The first is a reality TV series that focuses on apps and app developers, called Planet of the Apps . Celebrity advisors Jessica Alba, Gwyneth Paltrow, Gary Vaynerchuk, and will offer to guide new developers in an effort to win funding from prominent Silicon Valley venture capital firm Lightspeed Venture Partners, which incidentally is about to make a fortune on an app it funded years ago: Snap .

Apple started casting for the show last summer, which is kind of like The Voice mixed with Shark Tank but for apps. Speaking at the Code Media conference last night, Apple services chief Eddy Cue said the show would debut in the spring on Apple Music as well as through a dedicated app. Episodes will be released in a linear fashion, one at a time (sorry, binge watchers).

The second is Carpool Karaoke , which is based on the popular segment of the same name from The Late Late Show with James Corden. This one was already publicized, as no one can forget CEO Tim Cook singing "Sweet Home Alabama" at WWDC last year before confirming that the series was coming to Apple Music. The show will feature 16 celebrity hosts, and will likewise be released weekly instead of all at once.

Personally, neither show looks particularly compelling to me. But that's precisely the challenge that Apple now faces.

If the strategy fails, it will fail (relatively) cheaply

Given the extremely diverse spectrum of consumer preferences when it comes to video content, Apple will need to create content across a wide range of genres that appeal to a wide range of consumers if the company truly wants to position original content as a differentiator and selling feature in a meaningful way. As Apple Music expands around the world, Apple will also need to localize content and cater to local preferences in geographical regions all around the world.

That's expensive , and a tough balance even for pure-play media companies that specialize in and have deep experience with content. Apple has neither, even if it has deep pockets. Furthermore, the company has made it quite clear that it its content strategy is intended to bolster Apple Music, and has no intention to launch a stand-alone video streaming service ( although not for a lack of trying ). Besides, who subscribes to a music service specifically in order to get video content?

iPhones using Apple Music

Apple Music. Image source: Apple.

However, there is some potential for Planet of the Apps to inspire a new generation of developers, which would be a secondary benefit. Apple relies heavily on its army of third-party developers to keep its digital repositories flush with app content, and culturally reinforcing its pipeline of developers is a good thing. The show may serve in part as a giant episodic marketing campaign to come develop for iOS.

This is likely just the beginning for Apple, and presumably the company will diversify its content strategy further going forward. Fortunately for investors, the risks are fairly modest for a company of this size. While shows are expensive -- a season can easily cost tens of millions of dollars -- they're much less than if Apple were to pursue some sort of theoretical blockbuster acquisition around video streaming. On top of that, Apple Music's revenue run rate is in excess of $2.4 billion right now, based on the 20 million subscribers it disclosed in December.

I still think the original content strategy is misguided, but at least the financial risks are small if it fails.

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Evan Niu, CFA owns shares of Apple. The Motley Fool owns shares of and recommends Apple. The Motley Fool has the following options: long January 2018 $90 calls on Apple and short January 2018 $95 calls on Apple. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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