Apple Should Buy Hollywood

http://techcrunch.com/2012/01/26/apple-100-billion-buy-hollywood/

by senjamin • 14 years ago

82 59 14 years ago

notatoad• 14 years ago

as the article says, the concept of actually buying hollywood is a little ridiculous and a little pointless, but they don't need to.

putting up billions to license first-run shows is a terrible idea though. it validates all hollywood's reluctance to change any of their old business practices, and encourages then to keep being stick-in-the-muds. Hollywood needs to be disrupted, and a huge pile of cash is exactly what is needed for that to happen. If apple wants access to high-quality content for their TVs, they need to do something drastically different to scare hollywood into playing with them.

ColdAsIce• 14 years ago

One wall garden to buy another walled garden? Whats the point? We need to disrupt the movie, tv and music business. We need to tear down the wall.

ugh3• 14 years ago

Apple’s music business is in no way a walled garden.

bwarp3• 14 years ago

The store front for it is however.

stellar678• 14 years ago

Seems to me that Apple has already locked down a distribution and promotion model that is significantly less expensive than Hollywood. The only thing left is to replace Hollywood's role as "VC for TV/music/movie ideas".

I would imagine with their huge cost advantages, Apple could offer much more attractive deals to the creative people in the industries. Why not just start funding productions?

Hell, content is just Apple's carrot to get people to buy hardware. They don't even need to make a profit from it.

robomartin2• 14 years ago

Nah. Apple should turbocharge education.

senjamin• 14 years ago

totally agree.

bwarp3• 14 years ago

Apple should stay out of education.

The last thing education needs is lock in (content and application walled gardens) and a high entry cost (expensive hardware requirements).

Education should be free and open.

robomartin2• 14 years ago

Education is not free and it certainly isn't open. You pay for it with your taxes; the government decides what goes in the books and curriculum and unions don't let us create a competitive marketplace where bad teachers evaporate from the radar and truly good teachers compete and make two or three times the money they make today while providing a better education. Much like anything that government touches, the system is a mess and our competitors are eating us alive.

radley• 14 years ago

Why buy the cow...

jessedhillon• 14 years ago

Imagine any show or movie on demand on your TV, way beyond what is available in iTunes now. There is no program guide, no schedule. Everything is there, organized according to your taste...

This is what I want. Despite paying for Hulu, Netflix, and Amazon Prime, and being willing to pay for other such services I still can't get it. I have the Plex client installed on my Google TV, streaming shows that I torrent (even when they are on Hulu) and I rip Netflix movies. Not because I'm cheap and won't pay -- I would if they sold all this to me.

I can watch any content, on any device, anywhere but only because I'm a thief.

twiceaday• 14 years ago

Apple should buy a telco?

oldstrangers• 14 years ago

If Apple buying Hollywood means I can look forward to more interaction with iTunes, then no thanks.

The last thing we need Hollywood to turn into is an even more walled garden. The best answer for Hollywood is an open approach from end to end, from funding to distribution to better bandwidth.

Fund independent movies and television shows. Continuously. Encourage the death of dvd and bluray. Encourage the death of all hard copies of media, even thumb drives. Give NetFlix and Hulu more money. Lobby the FCC to regulate broadband speeds. Everyone should have 10+Mbps by now. These are the right steps towards defeating Hollywood.

tmh88j• 14 years ago

Internet access isn't available in everywhere and people will always want hard copies. I'm one of them. Who exactly is going to give Netflix money? Are you telling them to take out a loan, offer more stocks? Internet connection speeds aren't slowing down Netflix, it's Hollywood. They're not worried about their videos not streaming quickly enough; they're worried about making more $$$.

mechanical_fish• 14 years ago

Wait, you deplore walled gardens in one sentence, then call for the death of physical media in the next sentence?

You should be careful what you wish for. The first sale doctrine may be your last and best defense against that walled garden. You're legally allowed to trade DVDs; you're even legally allowed to sell them on the used market; try that with your digital media.

Many of Apple's most annoying policies re: movies and TV are dictated by the Hollywood corporations with whom one must deal if one wants to sell these things. You will probably find that the same forces apply to Netflix, and exactly how is Hulu not a walled garden?

cbs• 14 years ago

>Encourage the death of all hard copies of media, even thumb drives

This is a pipe dream that doesn't think more than 5 years into the future or understand the realities of distribution.

The properties inherent to physical media are some of the most consumer friendly aspects of distribution. Some can be approximated with a software-only approach, provided that the content provider wants to not only take the time to implement, but also wants consumers to continue to have those benefits. There are also properties of physical media that are impossible to duplicate with the internet, and what they do provide relies on them never going offline and never stop serving any each and every piece of content.

I have NES cartridges in my closet that are much more versatile than games on steam. I have a netflix streaming account that I _can not_ use when I visit my father because he doesn't have an internet connection and I can't cache netflix movies on my laptop. I have a friend, who because of hardware failure, can only use xbox dlc if he is connected to the internet (I don't really know the DRM specifics, but on the original hardware he didn't need to be connected).

I put up with some of these limitations because I hope they are temporary and digital distribution companies will eventually get their act together, but they're still a "last resort" option when I buy media.

CrazedGeek• 14 years ago

OT: Has your friend seen this page? http://support.xbox.com/en-US/xbox-live/marketplace-and-purc...

slowpoke3• 14 years ago

>The properties inherent to physical media are some of the most consumer friendly aspects of distribution.

I don't think so. What's consumer friendly about plastic garbage that takes up space, is ridden with unskipable ads, DRM to boot, and is a pain to handle?

The true "problem" (for those relying on this business model) still remains the reality that you ultimately cannot force people to pay for virtually cost-free distribution of content. You cannot stop free sharing either. All efforts to do so will eventually result in heavy censorship (actually, copyright and free speech are fundamentally at odds).

Pretty much all problems with digital media you describe are caused by this failure to accept reality on the side of distributors. It's not a problem with digital media, it's a problem created by trying to make digital media like physical media (-> being able to control distribution), when the former is so much more powerful, versatile and plain better than the latter. Distributions as a business model is dead. The future of digital media is one that doesn't rely on it, and embraces cost-free distribution and free sharing.

ctdonath2• 14 years ago

Your solution to defeating Hollywood is to give Hollywood complete control over access, distribution, and possession of every bit of content?

kiloaper• 14 years ago

You seem to forget that it's not just Americans who consume Hollywood content. NetFlix is great in theory but it's not available to everyone and even when it is the selection can suck. As for 10+Mbps connections? I wish. I had dial-up 4 years ago. Some countries, even 'modernised' western ones, still have crappy telecomms infrastructure.

nl• 14 years ago

No.

Apple (and Google, and Netflix and anyone else..) should campaign to have statutory music licensing[1] extended to video/film.

That originally came about when the music industry couldn't agree to reasonable licensing terms for radio, so the government intervened to impose a licensing regime that allowed the new industry to build audiences while still making a return for artists.

Sound familiar?

[1] http://en.wikipedia.org/wiki/Compulsory_license#United_State...

zeroboy• 14 years ago

I've always taken "kill Hollywood" as a call to reinvent entertainment and come up with fresh alternatives to the current garbage.

And oldstrangers nailed it with his iTunes comment. Ugh. Can't stand that software.

jey2• 14 years ago

Apple has tremendous proven ability to create/ride new markets, but no demonstrated ability to rescue doomed businesses with (soon-to-be-)failed business models. Why should they start now? Sure, that's only a backwards-looking argument against Apple buying Hollywood, but the burden is on those arguing in favor to explain why this makes sense for Apple. Seems like it'd be better for Apple to just milk the distributors while they can and at the same time make it easy for the next generation of content to be distributed via Apple... which is exactly what they're doing with iTunes.

Hm, what are some new business models (or more generally, pivots) that would make the dying distributors continue to be relevant?

buu700• 14 years ago

>Apple has ... no demonstrated ability to rescue doomed businesses

Uh... Really?

jey2• 14 years ago

The rest of the quote is relevant too: "no demonstrated ability to rescue doomed businesses with (soon-to-be-)failed business models".

If you're referring to Macs, the Macintosh line is more like a luxury clothing brand than a horse-drawn buggy manufacturer. Macs sell because they're commodities that have been dressed up with a luxury veneer[1], like a boutique clothing brand or "luxury"-class car. The perceived (and monetary) value of "luxury" commodities comes from the cachet of owning it more than any increase in value from better quality. Sure, luxury goods do usually have better craftsmanship too, but the high profit margins of luxury brands is pretty good evidence that consumers are paying for more than just the increase in quality.

There isn't really any analogue to luxury commodities in the media distribution space. The closest I can think of is HBO, and that's a pretty good model of the future: it's a service you subscribe to if you want it, and it's delivered over a generic pipe. More pure HBO-like entities are the future, except without the artifacts of having to be shoehorned into a cable and satellite distribution system.

1. Some would argue that they're also better from a functional perspective too.

rnadna• 14 years ago

Apple should fix the iphone-4S battery problem.

raheemm• 14 years ago

Louis CK has shown one way to bypass hollywood. If more artists replicate the CK model; if there are more online distributors that can reach any device (youtube, netflix); and if there are angels, VCs and more crowdfunding platforms for content creators, we can move closer to killing hollywood. What this does validate is that content is king. It needs better/alternate funding and distribution systems.

arturadib• 14 years ago

What they should really do is distribute some of those billions to their employees, and set a precedent for fair/social capitalism. Because yeah Steve Jobs was a genius, but any engineer who uses their devices knows that the folks who executed his ideas were just as critical for Apple's success.

dave_sullivan• 14 years ago

I'm starting to wonder if all these SV guys talking about fixing Hollywood is kind of like Hollywood saying they're going to fix SV (or revolutionize it with a poorly conceived product, poorly conceived because they have no domain experience there). Hubris?

I tend to agree there's likely a better model, but I suspect there's a bit more to it than the tech industry seems to think. Something to consider.

raarky• 14 years ago

how about completely ignoring Hollywood and instead, focus on creating a better production/marketing/distribution chain for film makers?

ChrisNorstrom2• 14 years ago

I wish Silicon Valley knew who they were talking about before coming up with this "kill hollywood" nonsense. As if Hollywood is 7 guys with rich parents sitting around waiting to be bought.

Hollywood BOUGHT congress, I doubt Apple or MS can buy Hollywood. I really need to write a piece on this.

jedbrown2• 14 years ago

Remarkably, Hollywood bought Congress while being a remarkably small part of the economy, both in terms of revenue (http://en.wikipedia.org/wiki/List_of_companies_by_revenue) and jobs (http://en.wikipedia.org/wiki/List_of_companies_by_employees). These are global lists, but you'll notice that not even Disney makes either one. As an economic matter, why should Congress be more responsive to Disney, Time Warner, and Viacom than to, say, Kroger, which has more employees and revenue than the others combined? The MPAA is visible far more than it is important.

As far as being for sale, publicly owned companies are always for sale.

ChrisNorstrom2• 14 years ago

Hollywood does not report profits on many of their films.

http://en.wikipedia.org/wiki/Hollywood_accounting

http://www.dailyfinance.com/2010/07/08/hollywood-applies-cre...

Google around and you'll find tons of articles on famous successful films that "never turned a profit".

Star Wars, Harry Potter, Lord of the Rings do this as well. They use VERY creative accounting to mark up overhead costs and hide profits.

waterlesscloud• 14 years ago

Indeed. If it were 7 guys sitting around, they may never sell at any price.

But if it's a bunch of conglomerates, which it is, then with enough money anything is possible.

jonnathanson2• 14 years ago

This makes no sense whatsoever. Sorry.

What upside is there for Apple in owning the expensive, unwieldy, production-side apparatus of Hollywood? Why should Apple be devoting resources, human and economic, to developing content when its hardware and software businesses are so much more profitable?

All this talk in recent weeks about "destroying Hollywood," and now, "buying Hollywood," focuses too much on Hollywood as it currently exists. If we're so confident that Hollywood-of-today is a ripe for disruption, then let's focus on disrupting it. The way to do that isn't to fight Hollywood on its own terms. It's to make the creation, distribution, and marketing of non-Hollywood films and shows easier for those outside of Hollywood to do. You don't kill Hollywood with a management change. You kill Hollywood by building -- or, really, supporting the growth of -- an alternative to Hollywood.

Apple already has the means to do this. Its software makes filmmaking and editing cheap, easy, clean, and powerful. And, at least in theory, there's nothing stopping Apple from placing independent films right alongside mainstream Hollywood films on the iTunes movie page. Or serving them up through Genius-powered collaborative filtering algorithms. Etc.

Apple already owns the future of Hollywood in a very meaningful way. To suggest that Apple needs to "buy" anymore of Hollywood is to miss the forest for the trees.

aptwebapps• 14 years ago

Well, that's what you might guess from the title and from the first half of the article where he posits that Apple _could_ buy Hollywood if it wanted to.

But then he goes on to say that what they _should_ do is to buy a bunch of distribution rights so that they can offer true a la carte TV programming.

jonnathanson2• 14 years ago

Where strategic acquisition of distribution would make some sense is as a competitive advantage over Amazon and Netflix (and over any similar competitors who might emerge). But to secure exclusive rights on key pieces of content, Apple would need to pay an exhorbitant amount of cash -- essentially, protection money to Hollywood to keep content out of competitive hands.

This also forces Apple into the game of picking hits, by betting on which pieces of content are going to be worth buying exclusive rights for. Hit-picking is a notoriously tricky business. (Even Hollywood gets it right only about 10% of the time).

Strategic, overall partnerships with key content providers -- HBO, for instance -- might make a great deal of sense. But to do so would be to place Apple's fate in the hands of HBO's development arm, i.e., to bet that HBO will keep turning out hits at the rate it currently is.

Perhaps a hybrid approach here is best: prime the pump with some exclusive, big-studio content, but over time, focus on developing a content ecosystem that is attractive to content developers the way the App Store is to software developers. Hollywood is a very pricey middle-man for content development; the long-term goal should be to build up the independent development system. If nothing else, this forces Hollywood's costs down by introducing legitimate competition.

larrydag• 14 years ago

Agreed. The article should be title "The quickest way for Apple to lose $100 billion in cash".

Also, didn't they do this already. See #pixar. Hollywood is all about content and the sooner they realize it the better they will be.

nicktelford• 14 years ago

I honestly can't think of anything worse for consumers.

By purchasing the content producers they would own the entire supply chain (from production to delivery), purchasing (nearly) every content producer would make them a monopoly both horizontally (owning every player in a single stage of the supply chain) and vertically (having interests at each stage of the supply chain).

I doubt (I'd hope at least) the US government would ever allow this to happen due to anti-competition laws. Honestly I'd be surprised if they weren't already investigating Apple over their current music/movie (and future book) distribution businesses.

I'm pretty disappointed that Erick (the author) could think this would ever be good for consumers.

The big problem with both the music and movie industry, from a consumer perspective, is that they operate a lot like a cartel. They should be competing with each other, not their customers.

beerglass• 14 years ago

Is this the one who replaced Arrington as chief-editor of Techcrunch? Duh!

anamax• 14 years ago

Apple doesn't have $100B, or even $90B, that it can use to buy Hollywood, pay dividends, give more money to employees, etc.

A huge fraction of Apple's cash is outside the US. Bringing that money into the US would require paying 35% (US corporate tax rate).

a_a_r_o_n• 14 years ago

Then we can look forward to patent lawsuits over aspect ratios.

No thanks.

saturdaysaint• 14 years ago

Apple is where it is because they see "where the puck is going" and high risk, blockbuster-driven Hollywood is not that. If anything, they should be looking to the far more complementary game industry. Exclusive games would translate directly into iPhone and iPad sales (ie their main profit centers!) in a way that's hard to imagine with movies. An acquisition or exclusivity deal with the increasingly desperate Nintendo would be money well spent.

I'll be surprised if there aren't a round of game company acquisitions to this effect in the next few years for exactly this purpose, as blue chip game makers struggle to compete with increasingly rich $3 smartphone apps, and as games are the main beneficiary of increasing smartphone power. Microsoft understands the value of a well timed acquisition (buying Bungie basically made the XBox an instant success), so I wouldn't be surprise if they initiate.

slowpoke3• 14 years ago

>An acquisition or exclusivity deal with the increasingly desperate Nintendo would be money well spent.

Please elaborate, in what way is Nintendo "desperate"? I'm not really following the console market anymore, but last I checked was Nintendo being the only of the big three console manufactures pushing innovative new concepts and making a killing with the Wii and DS. I know they are worrying about the mobile market, but is that really true competition for them right now?

Someone• 14 years ago

Google their recent financial report. It says something like "revenue down 30%, net loss half a billion $".

I would not call it desperate, but they likely are more than a bit worried.

alabut• 14 years ago

Sony made this same mistake in the 80's by buying a movie studio. I can't see Apple going down this road of diversification through acquisition.

Then again, Sony's terrible product divisions are propped up by their massive sales in life insurance and the company wouldn't exist without it:

http://www.splatf.com/2011/11/sony-profits/

hessenwolf3• 14 years ago

They say they have 96 billion in cash, yet their financial statements only list 54 billion. Where is the rest? Is it in a subsidiary? If so, aren't there also liabilities in the subsidiary? I don't get it.

MarkMc2• 14 years ago

I assume you are looking at the 'Total current assets' in the balance sheet of their latest 10Q [1]. Instead, add together 'Cash and cash equivalents', 'Short-term marketable securities' and 'Long-term marketable securities' to get $97,601 million.

[1] http://files.shareholder.com/downloads/AAPL/1659381773x0x536...

hessenwolf3• 14 years ago

Hey, thanks millions.

Interestingly, the third google result for 'Long-term marketable securities' is the following. Do you personally agree with adding this to cash?

http://www.usatoday.com/money/perfi/columnist/krantz/2011-08...

jiggy2011• 14 years ago

Please god no.

Apple is great and all but there seems to be almost a call from some people that the world would be best run by an international dictatorship with the half eaten fruit as it's flag.

jeffdechambeau• 14 years ago

"One thing they could do is buy their way into Hollywood. Think about it for a second."

If only the author did, then maybe he wouldn't have written this post.

Why would anyone want to buy an industry in self-imposed decline when they can sit on their hands, wait for them to wither, then push them around with whatever terms they like.

People need to stop reading TechCrunch.

Apple Should Buy Hollywood

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