In Q1 2023, PARQOR will be focusing on four trends. This essay focuses on  "The definition of scarcity is continuously evolving away from linear. What happens next?"

Two weeks ago I wrote about how Apple’s $6 billion spend on original TV series and films seems like a protective subsidy for Hollywood. Last week an old story about Apple TV+ received new attention from Bloomberg. It has promised $1 billion to produce movies that have at least a month theatrical run before they go to TV+ exclusively for streaming. 

Now, it’s not clear yet whether that is $1 billion on top of its annual content spend of $6 billion or simply an allocated share of the existing $6 billion. Either way, it seems to be a direct subsidy that shares DNA with the subsidy that cable networks have given regional sports networks (RSN). That subsidy comes in the form of requiring all cable network subscribers to be billed the fee for distributing the RSN, and not only the people who actually watch the network (typically 5% to 10% of the cable network subscriber base).

But the one-to-one comparison of Apple TV+ to cable networks falls short given that Apple TV+ is estimated to have 16.3 million subscribers in the U.S. (as of last June), and around 40 million subscribers globally. By comparison, cable networks reached 105 million U.S. households at its peak in 2010. Apple TV+ also has one of the highest churn rates in the U.S. market, at least, at 6.6%. A subsidy for Hollywood movies might help both metrics for Apple, but it’s speculative. 

And that leaves a big question: What are the win-win outcomes that Apple’s subsidy actually accomplishes?

Key Takeaway

$1 billion from Apple could go a long way to getting more “singles, doubles and triples” in theaters to help both market its platform and drive more theatergoers.  Or it won't.

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