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At Apple, The Mystery Only Deepens

Remember a few weeks ago when we were speculating on what Apple might be up to with their original content game?

That was right after they’d made the very smart move of hiring two Hollywood pros, Sony Pictures Entertainment’s Zack Van Amburg and Jamie Erlicht and announced that they would be spending $1B of their $250B cash reserve on original content.

Our question back then was “Where does Apple plan to distribute that $1B worth of content?”

Today, the Wall Street Journal reported that Van Amburg and Erlicht inked their first big deal for Apple, bringing on none other than Stephen Spielberg to recreate his 1980s hit Amazing Stories. This will, the Journal reports, cost Apple $5M per episode, which means they’ve got $950M left to play with after you subtract the cost of the 10 episodes.

And again, our question is “Where does Apple plan to distribute that $1B worth of content?”

Not Apple Music

While using the new shows as a way to pump up Apple music and steal audience from Spotify (who are winning the coveted Millennial demo 47% to 14%) seems like the most logical path—Apple Music is already a subscription service and can handle video— reports now seem to indicate that Apple won’t be going in that direction.

Not iTunes

There’s iTunes, of course, but nobody likes iTunes anymore and nobody under 60 quite knows what to do with it. (Boomers, bless their hearts, are still buying songs.) But on a more businesslike note, iTunes doesn’t make much sense because there’s no recurring revenue—it’s a transactional service, not a subscription service and having people rent or buy Amazing Stories once without having to sign up for something seems like something of a waste. (It’s possible that Apple could revamp iTunes to create a subscription video service on the platform, but that seems unlikely, given that Apple only has sales and rental rights for most of what’s on there.)

Not A Lot Else Out There

The other problem Apple is going to bump into is that should they decide to launch a Netflix-like service, there’s not much left in way of decent programming to launch it with. Most of the better old school TV series have already been snapped up by Hulu, Netflix and Amazon. (NB: When you hear about networks “pulling series” from Netflix, it often means they’re giving them to Hulu, since they own a chunk of Hulu. Not that they’re suddenly up for grabs to the highest bidder.)

And while Facebook may not have had the foresight to put a search function on Watch, they have been forward thinking enough to snap up most of the more popular niche short form content, taking that option off the table for Apple as well.

Which means that Apple will face the same problem that YouTube Red and Verizon Go90 ran into: it’s tough to launch a full on streaming service when someone else already owns the rights to all the shows you want offer. And since most of those deals are somewhat long term, it’s not like Apple’s $250 billion cash reserve can help them out right now. Unless, of couse, they plan on buying CBS. Or Disney. Or maybe even Time Warner.

But again, they’ve given zero indication of wanting to make any of those options happen.

The “Free” Option

That is why we keep defaulting to our original thought on what Apple should be doing: giving Amazing Stories away for free. Both the Spielberg show and amazing stories in general. By providing all that programming for free on a built-in iOS app, Apple can give its products a huge advantage over the competition. Want to watch Amazing Stories? Well, you need an iPhone. Or at least an iPad or maybe even a MacBook Air.

It’s a not-very-expensive marketing cost for their entire products line and a way to continue to set themselves apart as innovators. It’s also a way to easily distribute their new shows to millions of people worldwide and to reinforce Apple’s macro business plan, which is to make the bulk of their money off of their hardware, not their software.

And while it may be a little out there, right now it’s still sounding like the most logical solution.