An Apple movie, “CODA,” this week became the first movie from a streaming service to win the Oscar for best picture. The milestone means that the Hollywood establishment is finally accepting movies and TV shows that we watch over Internet connections as legitimate entertainment.
But wait, why does Apple have a streaming video service at all? And what are the effects on us when heaps of corporate money distort the market for conveniences we love? (I asked similar questions about Amazon last year.)
An Oscar is nice, but success for Apple is largely determined by making more profit every year. Sorry, those are the rules of capitalism. It’s hard to say whether streaming video contributes to that, or whether it’s an expensive distraction for Apple.
Spending dollops of money in sometimes reckless ways in pursuit of potential future profits is an age-old business strategy. Sometimes it works. Other times, it leads to MoviePass, which burned billions of dollars selling nearly unlimited movie passes for $10 a month, then went bankrupt.
Either way, companies that have money lying around can be great for us, at least for a while. It has most likely given us cheaper and better streaming video services than we would otherwise have, cheap Uber rides and cheap gas. Yes, I make a link between cheap gas and streaming video. Stay with me.
Products that result from sometimes irrational short-term spending can be both glorious to us and a dangerous mirage if and when the money dries up.
Some background: Apple started a streaming video service called Apple TV+ in 2019. Some people who buy a new Apple device get the service for three months for free; otherwise, Apple charges a monthly fee of $4.99 in the US. That’s about a third the cost of streaming subscriptions from Netflix and HBO Max, which have more things to watch.
Apple rarely explains why it does anything, and the company hasn’t been clear about its goals for TV+. But the conventional wisdom is that streaming video is part of his strategy to keep Apple device owners loyal and entice them to spend a little more money.
Has this justified the cost and energy Apple spends streaming video? shrug. It’s also unclear whether Amazon’s streaming video service has been a successful way to lure and retain Prime members.
Maybe running a Hollywood entertainment empire is just fun. Apple and Amazon are so successful that they may be wasting some money trying to find out if they will ever get richer by offering streaming video. But it’s worth considering the potential disruption to products and services we like when companies decide their generous spending is no longer a smart bet.
Uber rides were mostly cheap until about 2020, as the company had investor money to go after many riders even when trips weren’t making a profit. Similar financial recklessness now subsidizes city dwellers who order Doritos and have milk delivered to their door in 15 minutes. In the 2010s, investors’ cash flows enabled U.S. energy companies to use new fracking methods to excavate oil and gas.
In all those cases, money that didn’t need to be spent wisely has reshaped our world. We got cheaper gas and Uber rides and convenience services that couldn’t have existed without investors laying around with money and hoping it would pay off in the future. Irrational money also made Netflix an entertainment giant, and now Amazon and Apple are throwing their money around too.
We will probably get better and cheaper streaming services than if there were fewer companies selling entertainment subscriptions. People involved in creating entertainment have more potential buyers for their work. Nice.
But what happens if the money suddenly has to be linked more directly to making a profit? Netflix has long needed investors to subsidize its service, and now the company is financially sound. But Uber remains unprofitable and rides are no longer cheap. Frackers have so recklessly burned so much of their investors’ money that they are now wary of digging for more oil and gas, even in an energy crisis, because their investors no longer trust them.
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Maybe Apple and Amazon will make it big in video streaming. But what if one of those companies decides it’s no longer willing to waste billions of dollars on entertainment that doesn’t benefit profits? Would Netflix Cost $40 a Month Because There’s Less Competition? Would screenwriters end up as Pennsylvania homeowners who depended on royalties from dried up shale drilling?
We can just enjoy the money spent to entertain ourselves while it lasts. But know that the heaps of money may be coming to an end, and it could be painful for the people who make entertainment and those of us who watch it.
Before we go…
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Uber and taxis unite! Imagine if Duke and University of North Carolina basketball fans held hands and watched the Final Four together. (For non-athletes, no. Those fans hate each other.) That’s pretty much what’s happening now, with Uber and multi-city taxi companies letting people order Uber or taxi rides through the Uber app. My colleague Kellen Browning reports on such an agreement being made in San Francisco.
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The technology of this company allowed Russian surveillance: Internal documents reviewed by my colleagues describe the work of the telecom equipment company Nokia, which played a key role in Russia’s system of spying on its citizens and dissidents. It’s a fascinating article that made me think about the role of technology that can be used in invasive ways and the responsibility of the companies that make it.
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Fake LinkedIn People: Disinformation researchers identified more than 1,000 LinkedIn accounts using profile pictures that weren’t real people, but images generated by computers. NPR found that this was essentially an aggressive tactic by salespeople.
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