Online Video - A Billion-Dollar Opportunity

According to a report on Variety, Apple is considering producing its own original video programming. While the idea of Apple producing TV shows and possibly movies may sound weird at first, there is a bunch of reasons why such a move would make sense for the world’s most valuable company.

First of all, Apple is expected to unveil a new version of Apple TV next week and there are consistent rumors saying that the company could launch a Netflix-style subscription service along with it. What better way to promote such a service than to offer exclusive content? After all, Apple is sitting on so much cash that it could easily afford a billion-dollar investment in original content if it helps to sell more Apple TVs, iPads and iPhones.

Secondly, the online video market is growing rapidly. As our chart, based on data from Statista’s Digital Market Outlook, nicely illustrates, the growth potential in online video is much bigger than it is in digital music. Annual revenues from video streaming and downloads are expected to grow by more than $6 billion between 2014 and 2020 – almost four times the expected growth of the digital music market. Considering that subscription-based streaming is the primary growth driver in the online video market, it would make sense for Apple to get into the game before Netflix, Amazon and Hulu can run away with the market.