Apple is scaling back its Hollywood spending after investing over $20 billion in original programming with limited success, Bloomberg reports.
This shift comes after the streaming service, which launched in 2019, struggled to capture a significant share of the market, accounting for only 0.2% of TV viewership in the U.S., compared to Netflix's 8%. Despite heavy investment, critical acclaim, and numerous award nominations, Apple TV+ purportedly generates less viewing in one month than Netflix does in a single day.
Over the last five years, the Apple TV+ has had only four series make Nielsen's weekly list of the ten most popular original streaming shows. While Ted Lasso was the most-watched streaming show of 2023, Apple TV+ still accounts for a smaller share of top ten hits than any streaming service except Paramount+.
Apple's initial foray into streaming was marked by lavish spending on high-profile projects and talent, including deals with big names like Oprah Winfrey, Steven Spielberg, and Jennifer Aniston. The company's Hollywood operation, led by studio chiefs Zack Van Amburg and Jamie Erlicht, positioned itself as a talent-friendly destination, reminiscent of HBO, offering creators seemingly unlimited financial resources.
Apple spent more than $500 million combined on movies from directors Martin Scorsese, Ridley Scott, and Matthew Vaughn, and upwards of $250 million on the World War II miniseries Masters of the Air. Despite the strong reviews and awards nominations, these projects have not yielded the viewership that Apple apparently hoped for.
The company's new strategy is said to involve tighter budget controls and a more cautious approach to spending. This includes paying less upfront for shows, being quicker to cancel underperforming series, and delaying productions to manage costs better. For instance, the production of the sci-fi series Foundation was postponed to prevent budget overruns caused by delays related to the 2023 actors and writers strikes.
The cost of the second season of Severance surged to over $20 million per episode due to pandemic-related delays, internal conflicts, and additional expenses such as hiring House of Cards creator Beau Willimon for script contributions. Management has asked the producers of Severance to reduce the budget for future seasons, emphasizing the need for financial sustainability.
Apple has also become more selective in acquiring new projects, declining to buy some shows that sellers believe the company would have accepted just a few years ago. The company allegedly wants to shed the image of being Hollywood's biggest spender and bring more discipline and strategy to its content investments.
While still willing to invest heavily in certain high-profile projects, such as The Morning Show, where cast salaries alone exceed $50 million for the upcoming season, Apple TV+ is becoming more fiscally conservative. The Morning Show stars Jennifer Aniston and Reese Witherspoon will each earn more than $2 million per episode. This recalibration comes at a time when other major studios like Disney, Warner Bros., and Paramount are similarly cutting back on streaming budgets due to mounting losses.
