Hollywood is bracing for a possible writers' strike that could begin at midnight PT, following an overwhelming strike authorization by members of the Writers' Guild of America West and East last month.
For the industry's top streamers, shutting down writers' rooms indefinitely could fuel subscriber churn and slow the delivery of new shows and movies to consumers. And for Apple, specifically — whose $2.7 trillion market capitalization makes it the world's most valuable company — industry observers say a strike could put pressure on the tech giant's streaming division in ways that some competitors are better equipped to confront.
Experts who spoke to Insider pointed to two major attributes that could create headwinds for Apple TV+: its relatively limited library of content; and a more nascent relationship with producing unscripted programming, which came to the rescue for television networks during the last major strike more than a decade ago.
For starters, Apple's library is significantly smaller than many rival streamers. Apple TV+ has almost 200 original series and fewer than 60 original films. But, by comparison, Prime Video, Netflix, and Discovery+ offer viewers thousands of TV series, according to ReelGood data from the end of 2022. And the libraries at HBO Max, Disney+, Paramount+, and Peacock's premium service all number in the hundreds of shows.
Platforms boasting more robust libraries could fare better in attracting and retaining subscribers throughout the turbulence, experts said.
"One hundred percent, it will impact churn," Michael Pachter, a media and entertainment analyst who serves as managing director for equity research at Wedbush Securities, told Insider.
While it's unclear how long a strike could last, Pachter predicted that a hypothetical three-month work stoppage — which would dovetail with the last 100-day strike that roiled Hollywood in 2007-08 — could slash the volume of new productions in 2023 by a quarter.
A recent survey from Deloitte found that subscribers are increasingly ditching streaming memberships because of inflation, and some younger viewers told Insider they would only renew to catch hot new shows when they release. But Pachter and other experts said Apple doesn't rely on streaming as a crucial revenue generator, so the company shouldn't worry.
"They're building a long-term brand of Apple TV+, which is something apart from all their devices and their cool software. And they're in the early innings," Pachter said, adding: "I think they literally have a 100-year vision — not worried about making a quarter."
An Apple spokesperson declined to comment.
Apple TV+ hasn't embraced licensed or unscripted programming like rivals
Since its debut in 2019, Apple TV+ has produced a more limited pool of content than competitors like Netflix or Amazon Prime Video, but recruited a bevy of all-stars to attract viewers. It has enlisted A-list directorial talent like Ron Howard and Scott Burns and elite movie actors like Meryl Streep, Forest Whitaker, Reese Witherspoon, and Jennifer Aniston. Runaway hits have included "Ted Lasso" and "The Morning Show," which was just renewed for a fourth season.
The service is also slightly more competitively priced than some rivals: Apple TV+ is $6.99 per month without ads, versus Netflix's ad-free tiers ranging from $9.99 to $19.99 per month.
Rahul Telang, a professor of information systems and management at Carnegie Mellon University's Tepper School of Business, told Insider that Apple is more focused on the "quality game" versus a pure volume play. Even so, the streamer is releasing new content ahead of the strike, rolling out titles in recent weeks like "The Last Thing He Told Me," a drama series starring actress Jennifer Garner. It has scheduled at least 10 series and five films to debut in the coming months, according to its website. And second or third seasons of existing shows like "Harriet the Spy" and "Stillwater" are set to premiere as soon as next month.
But Julia Alexander, director of strategy at Parrot Analytics, warned that may not be enough.
"Apple TV+ has a supply issue," Alexander wrote in a recent analysis for the news organization Puck. "Others boost their volume and value by building or acquiring a catalog," she explained, adding: "Apple doesn't have its own library like Disney or the other traditional studios, nor does the company seem interested in licensing a big catalog to supplement its originals."
What's more, Apple TV+'s forays into unscripted terrain — through titles like "Greatness Code," a documentary series about celebrated athletes, or an experiential recording of the Broadway show "Come From Away" — haven't caught fire like Netflix's hits such as "Bling Empire" and "My Unorthodox Life," starring Julia Haart, La Perla's former creative director.
And its international business is smaller than competitors like Netflix and Amazon Prime Video, which could enable those streamers to leverage overseas resources to generate new content while US-based writers are on strike.
Streamers aren't letting writers see them sweat
In advance of the potential strike, leaders at some paid entertainment streaming services are publicly projecting bravado.
On Netflix's most recent earnings call in April, co-CEO Ted Sarandos touted a "large base of upcoming shows and films around the world" and "pretty robust slate of releases" in explaining why he believes the company is set up to "serve our customers better than most."
Apple may be taking a similar approach, relying on stockpiled content to navigate a choppy period. But shedding subscribers in the short term might not seem like a serious threat, if only because the streaming business represents a narrow slice of Apple's overall revenue.
Revenue generated by Apple Services — which encompasses Apple TV+ as well as its iCloud storage system, Apple Music, Apple Arcade, and other products — amounted to about one-sixth (almost $21 billion) of its more than $117 billion in revenue during the last quarter of 2022, according to the company's most recent earnings report. Sales of the iPhone netted nearly $66 billion over the same time period, for comparison.
"Apple can just as easily — more easily than almost any of the streamers — take a pause," Alvin Lieberman, a professor and executive director of the entertainment, media, and technology program at New York University's Stern School of Business, told Insider.
"If it turns out that they really have a wasteland in front of them for, let's say, 30, 60, 90 days, it would not damage their P&L. It would not damage the perception that people have of Apple TV+."
Do you work at Apple or in the entertainment business? Insider wants to hear from you. Contact reporter Reed Alexander via email at ralexander@insider.com, or SMS/the encrypted app Signal at (561) 247-5758.
