Netflix,Inc. CEO Reed Hastings is not losing sleep over Apple Inc. ’s much rumored foray into his territory. Shares of Netflix tumbled more than 8 percent on Tuesday amid reports that Apple is considering a move into original content. Investors are worried that the entry of Apple could make the going tough for streaming services like Netflix,Inc. .
But Hastings seemed relaxed. Speaking to CNN, he said, “Other people are doing shows too. HBO is doing shows, FX are doing shows … so the fact that additional tech companies may be doing shows, that’s really not that big a deal given the total number of shows being produced around the world.”
Apple Out to Take Over Hollywood
What Apple Inc. is planning is very hush-hush! But if the Street buzz is be believed, the tech giant is reaching out to top entertainment names for confidential talks.
Earlier on Monday, a Variety report said that Apple had made a bid for former BBC “Top Gear” team of Jeremy Clarkson, Richard Hammond and James May. Eventually, Amazon.com Inc. secured the team’s new show. When contacted, Apple declined to respond to the report.
Speculation about Apple Inc. move into original programming has been ongoing for years. BTIG was the first to write about the possibility of such a service in 2012. BTIG analyst Richard Greenfield now expects the iPhone maker to unveil an Internet TV service by 2016.
Industry insiders say Apple Inc. is currently assessing whether to start bankrolling movies and original TV shows. It is even contemplating becoming a deep-pocketed buyer of Hollywood content. But most are unanimous that the venture is still in its “very early days.”
Stepping into original content may be a part of a broader strategy that Tim Cook is devising for the next five years. Of course, hardware will be their mainstay for the foreseeable future. But to take the firm to the next level, Cook needs new drivers of growth. Apple TV is an integral part of that strategy. The company is likely to unveil an upgraded set-top box next week. And if the current grapevine is to be believed, it won’t be long before Apple TV starts broadcasting its exclusive shows.
Netflix Remains Confident
Netflix,Inc. shares have had an outstanding 2015, after more than doubling since the start of the year. But this week has been bad for the stock. On Monday, the company announced its decision to expire its distribution deal with Epix, which includes movies from Paramount, MGM and Lionsgate. A few hours after the announcement, rival Hulu said it had entered into a deal with Epix.
Netflix,Inc. will be launching this week in Japan, and Reed Hastings is confident that the streaming service will be in every Asian country by next year – including big boys, China and India. Maybe that’s why the news of Apple Inc. ’s entry does not threaten him. He will always have the first mover’s advantage.