Bloomberg’s Lucas Shaw hinted that Apple is embarking on a strategic shift to license its original films, aiming to bolster its content visibility and generate additional revenue. This marks a departure from the traditional streaming model, emphasizing exclusivity to drive subscriber growth. The move, led by Maria Ines Rodriguez, an executive with a background at Disney and Comcast, signals Apple’s intent to adapt to the evolving dynamics of the streaming industry.
Rodriguez, who joined Apple earlier this year, is tasked with developing a global content distribution strategy to expand Apple TV+’s reach. The plan involves licensing Apple’s films to third-party platforms, such as foreign television networks and digital storefronts, enabling audiences to rent or purchase content. Notably, the initiative currently excludes Apple’s TV shows, maintaining their exclusivity on Apple TV+.
This shift reflects pressure from Apple’s leadership, including CEO Tim Cook and services head Eddy Cue, to improve the financial performance of Apple TV+. Despite critical acclaim and multiple awards for its original productions, the platform has struggled to generate substantial profit or widespread audience appeal. Licensing films to other platforms allows Apple to increase revenue streams and introduce its high-quality content to viewers who may not yet subscribe to Apple TV+.
The decision aligns Apple with a growing trend among media companies like Warner Bros. Discovery, Disney, and Paramount, which are increasingly licensing their content to competitors. By broadening access to its films, Apple aims to build awareness of its brand and maximize the return on its significant investment in original content.
The Take
Apple’s move to license its films highlights the transformative role of content licensing in the streaming industry. As the sector grapples with rising costs and audience fragmentation, licensing has emerged as a strategic tool to balance profitability and viewer satisfaction. Insights from Hub Entertainment Research underscore this trend, offering valuable context for Apple’s pivot.
How Content Licensing is Reshaping the Streaming Landscape:
Hub’s latest report, “Conquering Content,” reveals a significant shift in how audiences consume streaming content. 60% of respondents reported watching more shows outside their original platforms, underscoring the impact of licensing agreements. This trend is exemplified by the so-called “Suits Effect.” Initially available (via streaming) on Peacock, Suits surged in popularity when it was licensed to Netflix, attracting a new wave of viewers and demonstrating the enduring appeal of legacy titles.
Additionally, 79% of respondents said they watch more of the TV they genuinely enjoy, an 11-point increase since 2020. This rise is attributed to the availability of beloved older shows across multiple platforms. Hub’s data also shows a growing preference for older series, with 60% of viewers in 2024 naming an older show as their favorite, up from 54% in 2021.
These findings highlight the dual benefits of licensing: platforms gain high-value content at a lower cost, while viewers enjoy more accessible access to familiar favorites. For Apple, leveraging this strategy could significantly enhance the visibility of its films and introduce its content to new audiences globally.
The “Suits Effect” and Financial Benefits of Licensing
Licensing has proven to be a cost-effective way to meet audience demands while navigating the financial pressures of producing original content. An earlier report from Netflix revealed that licensed content accounted for 45% of all viewing time on its platform in early 2023. Media consultant Mitch Metcalf’s analysis echoes this trend, noting that nearly three-quarters of streaming time across platforms is spent on licensed shows and movies. Moreover, high-episode-count titles like The Office and Friends play a crucial role in retaining viewers within a platform’s ecosystem, allowing services to maintain engagement with existing content without the ongoing costs of producing new originals.
For Apple, entering the licensing market could unlock similar opportunities. By distributing its films through third-party platforms, Apple can attract a broader audience, generate incremental revenue, and position itself as a prominent player in the global content market.
Apple’s licensing strategy also mirrors broader changes in the streaming sector. As the golden age of unlimited content spending wanes, platforms are re-evaluating their content strategies to focus on sustainable growth. Companies like Disney and Warner Bros. Discovery are licensing flagship series like Band of Brothers and Six Feet Under to Netflix, reversing the industry’s initial walled-garden approach.
These moves are driven by both financial pragmatism and shifting viewer preferences. Licensing agreements allow platforms to monetize existing content libraries while reducing the risk of costly new productions. This strategy supports revenue growth for Apple and introduces its award-winning films to audiences who might otherwise remain unaware of them.
Licensing as a Catalyst for Growth
Apple’s foray into content licensing is pivotal in its streaming journey. By embracing this strategy, Apple is addressing the financial challenges of running a streaming service and aligning itself with the evolving preferences of global audiences. The success of licensed content, as demonstrated by Hub Research and industry trends, underscores the potential for Apple to expand its reach and solidify its presence in the competitive streaming market.
As the streaming industry evolves, licensing will play an increasingly central role in shaping platform strategies and viewer behavior. Apple’s decision to license its films is a forward-thinking move that could redefine its position in the market, paving the way for sustainable growth and broader audience engagement.
