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Apple Makes Headway in Movies: Should NFLX, AMZN, DIS Worry?


Apple AAPL recently acquired global distribution rights for two “family-focused movies” per Bloomberg. These include rights to an animated movie Wolfwalkers from Cartoon Saloon, an Ireland based studio and a documentary film, The Elephant Queen, which premiered at the Toronto International Film Festival.

The deals reflect Apple’s strategy of aggressively pushing into the streaming market. Last year, the company hired former Sony executives Zack Van Amburg and Jamie Erlicht to develop its content portfolio for the streaming market, currently dominated by the likes of Netflix NFLX, Amazon AMZN, HBO and Hulu.

Since then, Apple has been on a spending spree to scoop up original TV content, featuring some of the biggest directors and actors in Hollywood. The content addition is expected to support the launch of an Apple streaming platform as soon as March 2019.

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Apple’s Expanding Content to Boost Streaming Service

The list of new Apple television programs includes a reboot of Steven Spielberg's original series Amazing Stories; an animated series from the Emmy-winning creator of Bob's Burgers; a world-building drama from Peaky Blinders creator and Hunger Games director; an untitled show starring Jennifer Aniston and Reese Witherspoon; a drama series by La La Land director Damien Chazelle; a psychological thriller by M. Night Shyamalan and many more.

Reportedly, Apple, which currently sports a Zacks Rank #1 (Strong Buy), has shown interest in acquiring the distribution rights of the upcoming James Bond movie, which is worth in the range of $2-$5 billion. You can see the complete list of today’s Zacks #1 Rank stocks here.

Although the details of many of Apple’s shows and its streaming platform have not been revealed, investors should be pleased with the company’s aggressive push into developing a new revenue stream.

Moreover, the deal with Cartoon Saloon presents significant growth opportunity. The studio has three Academy Award-nominated animations — Secret of Kells, The Breadwinner and Song of the Sea — in its basket. Notably, Cartoon Saloon’s Emmy-nominated pre-school series, Puffin Rock was a huge success on Netflix and Tencent’s platform.

Apple might step up its deals with Cartoon Saloon as the studio is capable of making popular content in the short movies, feature films and TV shows segment. This will further boost the company’s content portfolio going forward.

Netflix Relies on Spending to Fight Competition

The streaming market is becoming intensely competitive due to a growing number of challengers like Apple and Disney DIS.

Netflix, which dominates the streaming video market, is riding on whopping investments in original content. The company expects to spend close to $8 billion on a profit and loss basis on content in 2018, while also shelling out roughly $2 billion on marketing. Netflix also plans to spend around $1.3 billion on technology and development this year.

Netflix, a Zacks Rank #3 (Hold) stock, is also snapping up Hollywood talent to boost its movie business. Partnerships with prolific creators like Ryan Murphy, Shonda Rhimes, Shawn Levy and Jenji Kohan have expanded the company’s original content portfolio. The company plans to release 80 original movies in 2018.

Amazon to Spend More Going Ahead

Amazon, a Zacks Rank #2 (Buy) stock, is expected to spend roughly $5 billion on original programming this year.

Reportedly, the company is going to air a new series on Prime called The Hunt, directed by Jordan Peele of Get Out fame and David Weil. Apart from this, Amazon also gave its nod for a new series Cortés from executive producers Steven Spielberg and Steven Zaillian. Moreover, Amazon Studios acquired the global television rights to Consider Phlebas, the first novel of the culture series by Iain M. Banks.

Notably, Amazon Prime Video received 22 Emmy nominations for its original programming, including 14 nominations for the comedy series, The Marvelous Mrs. Maisel.

Additionally, regional content expanded with the launch of Comicstaan in India, Diablo Guardian in Mexico, and the second season of The Bachelor Japan. Moreover, the second season of Goliath started streaming during the second-quarter 2018.

Moreover, the e-commerce giant is in talks with Sony and Viacom VIAB to bring in more movies to its platform that will eventually add to its user base. Reportedly, Amazon and Sony’s prior deal allowed Prime members exclusive access to Jumanji: Welcome to the Jungle and Hotel Transylvania 3 before their nationwide release.

Disney to Benefit From Blockbuster Lineup

Disney’s Studio Entertainment segment has an impressive lineup of big budget movies slated to be released over the next 18 months. It includes Ralph Breaks the Internet, Mary Poppins Returns, Captain Marvel, Dumbo, Avengers 4, Aladdin, Toy Story 4, The Lion King, Frozen 2, and Star Wars: Episode IX.

Additionally, Disney’s planned acquisition of the majority of Twenty-First Century Fox’s assets will significantly expand its content portfolio. The company will have telecast rights of Major League Baseball and NBA in the United States; Premier League, Serie A, Bundesliga and UEFA Champions League in Europe and Indian Premier League (IPL).

Moreover, Disney plans to launch its own direct-to-consumer service in 2019. The termination of the distribution agreement with Netflix will enable it to offer rich content exclusively from Disney, Pixar, Marvel and Lucasfilm. This presents a significant growth opportunity for the company.

Disney has a Zacks Rank #4 (Sell).


It might not be possible for Apple to grab market share from Netflix, Amazon and Disney instantly. However, the company’s huge cash balance, which is approximately seven times the combined cash balance of all the three companies, provides it a significant advantage.

Additionally, Apple’s loyal customer base will play a crucial role in driving its popularity in the streaming market.

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