Ronny Sianturi
In March 2019, Apple CEO Tim Cook stood on the hallowed stage of the Steve Jobs Theater, a futuristic architectural marvel nestled within the tech giant’s sprawling Cupertino, California campus. It was a moment charged with legacy and ambition, as Cook officially propelled Apple, a company synonymous with revolutionary hardware and software, into the highly competitive and creatively demanding world of entertainment. The choice of venue was no accident; it echoed the very spirit of Steve Jobs, whose own career was inextricably linked to the fusion of technology and creative expression, most notably through his pivotal role in the rise of Pixar Animation Studios.
Jobs’ profound impact on bridging the gap between the digital realm and storytelling was well-documented. His stewardship of Pixar, from its early days as a nascent computer graphics venture to its eventual acquisition by Disney, solidified his reputation as a visionary who understood the power of compelling narratives. Now, as Jobs’ chosen successor, Tim Cook was poised to carry that torch, steering Apple into an arena where artistic merit and technological distribution could converge to redefine the media landscape.
Cook articulated Apple’s vision with clarity and conviction. "Great stories can move us and inspire us," he declared to the assembled audience of industry titans and press. "They can surprise us and challenge our assumptions. We feel we can contribute something important to our culture and to society through great storytelling, so we partnered with the most thoughtful, accomplished, and award-winning group of creative visionaries who have ever come together in one place to create a new service unlike anything that’s been done before." This pronouncement signaled not just the launch of a new streaming service, Apple TV+, but also a significant investment in content creation, with Apple establishing itself as a producer of original films and television shows. Early on, the platform garnered favor among creators for its willingness to aggressively pursue high-profile projects and its commitment to offering considerable creative freedom.
The inaugural Apple TV+ launch event was a star-studded affair, featuring luminaries such as Steven Spielberg, J.J. Abrams, and Sofia Coppola, alongside acclaimed actors Jennifer Aniston, Steve Carell, and musician Sara Bareilles. The event culminated with a surprise appearance by media mogul Oprah Winfrey, who announced a significant content partnership with Apple. Winfrey underscored the immense reach of Apple’s devices, noting, "Because they are in a billion pockets, y’all, a billion pockets. The whole world has got them in their hands, and that represents a major opportunity to make a genuine impact." Cook, visibly moved, responded, "Thank you, Oprah. Thank you. I will never forget this."
The strategic importance of services, including Apple TV+, to Apple’s broader business model cannot be overstated. In 2019, the company’s services division, encompassing Apple TV, iCloud, and digital advertising, generated $46.3 billion in revenue. By the following year, this figure had surged to over $109 billion, a testament to Cook and Eddy Cue’s strategic imperative to diversify Apple’s revenue streams beyond its traditional hardware and software sales. Books chronicling Cook’s tenure as CEO will undoubtedly highlight the pivotal role of the services division, with Apple TV+ positioned at its core.
Despite this impressive growth, Apple TV+ operates within a fiercely competitive streaming market, where its subscriber base, though undisclosed by Apple, is understood to be smaller than many of its rivals. The company has, however, taken steps to expand its reach, forging partnerships with platforms like Amazon and Peacock to broaden distribution. Eddy Cue, Apple’s senior vice president of Internet Software and Services, recently indicated to The Hollywood Reporter that Apple’s inaugural Formula 1 race broadcast garnered more viewers than ESPN’s coverage of the same event a year prior, though specific viewership figures remain proprietary.
The impending leadership transition at Apple adds a layer of uncertainty to the future of its entertainment endeavors. With hardware engineer John Ternus set to assume the role of CEO in September, the industry is keenly observing his potential approach to the burgeoning media business. Ternus’ background in hardware engineering offers little direct insight into his strategic inclinations regarding content acquisition and production. This ambiguity has generated palpable anxiety within Hollywood agencies that have come to rely on Apple’s substantial investment and creative latitude.
While Eddy Cue, a key architect of Apple’s services strategy, is expected to remain in his position, ensuring a degree of continuity, Ternus has yet to articulate his vision for Apple’s engagement with the entertainment sector. The central question for Hollywood is whether Ternus will maintain the status quo—continuing Apple’s aggressive pursuit of ambitious projects, even as its theatrical film distribution strategy remains in flux—or if he will opt for a more fiscally conservative approach, potentially reallocating resources towards higher-margin services. This decision will likely hinge on the perceived value of Apple TV+ within the broader Apple One ecosystem, a synergistic bundle of services meticulously crafted under Cook and Cue.
Although Ternus may not possess a direct services background, his mentorship under Tim Cook suggests a keen understanding of Apple’s overarching business objectives. The high-margin, rapidly expanding services sector presents a compelling growth opportunity that is unlikely to be overlooked. Analysts have identified several potential avenues for growth within Apple TV+, including the introduction of advertising, a strategy Apple has largely eschewed for its subscription services, with the notable exception of live sports.
Sources close to Apple indicate that while an ad-supported tier for Apple TV+ is not in immediate consideration, the company has not entirely ruled out such a possibility in the longer term. Brian Wieser, an analyst at Madison and Wall, commented on the potential impact of leadership changes. "Leadership changes can enable shifts in strategy, even for large and established industry mainstays," Wieser noted. "In Apple’s case, however, the company’s approach to advertising appears tied to its product philosophy and not just its CEO. Unless that philosophy changes, ad growth is likely to be steady rather than inflecting higher."
Conversely, Ternus could also choose to significantly deepen Apple’s commitment to the entertainment industry. Laura Martin, an analyst at Needham Research, suggested that advertising revenue could be substantially higher if Apple embraces it more aggressively. However, she also posited that Ternus might leverage Apple’s considerable cash reserves—estimated at approximately $67 billion—for more ambitious strategic maneuvers.
"We believe AAPL should partner with, or buy, Disney, in order to drive longer engagement lengths and give it differentiated assets (i.e., films and TV series) that have pricing power and powerful moats," Martin elaborated in a recent analysis. "We believe AAPL should also be using M&A, partnerships, and industry leadership to accelerate value creation." Such a bold move is not entirely without precedent. The interconnectedness of Apple and Disney is further highlighted by the fact that former Apple COO Jeff Williams now sits on Disney’s board. Moreover, former Disney CEO Bob Iger, a close friend of Steve Jobs, previously served on Apple’s board before stepping down upon the launch of Apple TV+.
In his 2019 autobiography, "The Ride of a Lifetime," Iger reflected on the possibility of a deeper collaboration between the two companies. "I believe that if Steve were still alive, we would have combined our companies, or at least discussed the possibility very seriously," he wrote. While Tim Cook has historically steered clear of such transformative acquisitions, a new CEO with a different perspective could potentially reconsider these long-discussed synergies. The fundamental question for Hollywood remains: what direction will Apple’s new leadership take its ambitious entertainment venture? Will it continue to invest heavily in content and creative talent, or will it pivot towards a more focused, perhaps more financially driven, strategy? The answer will undoubtedly shape the future of storytelling in the digital age.
