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The New York Times reports on the pitched battle that is about to break out between Apple and Netflix, as there two giant companies face off over content as they battle for viewer attention.

Today, the Times points out, Apple is expected to unveil “its most ambitious media project yet - a news and entertainment bundle that is likely to offer access to magazines, newspapers, music and, perhaps most intriguingly, original shows and films. And when a tech giant like Apple jumps into entertainment, it’s going to create waves.”

The story notes that the amount Apple is committed to spending “on new material is nowhere near the $10 billion Netflix will plow into content this year, but Apple has something Netflix does not: more than a billion devices all over the world, which amounts to an infrastructure. That beats out the 139 million people worldwide who have subscribed to Netflix. If Apple is suddenly able to fill the screens of those devices with its own content, as well as programming from other companies it has struck deals with, it will turn itself into a beast sure to put a scare into Netflix.”

Apple is said to have committed $1 billion to its content ambitions, with that money going to some first-class talent - Steven Spielberg, JJ Abrams, Reese Witherspoon, Jennifer Aniston, Steve Carell and M. Night Shyamalan are among the names toi be mentioned at today’s unveiling.

The Wall Street Journal offers this assessment of Apple’s ambitions: it is “to become an alternative to cable, combining original series with shows from other networks to create a new entertainment service that can reach more than 100 markets world-wide. It is the tech giant’s latest attempt to reinvent television, something it has tried to do for about a decade with limited success.”

And why? At least in part because it has to - iPhone sales, long a cash cow for Apple, are “sputtering,” and if hardware can’t generate growth, then software is the next best bet.

In the past, the two got along, and one could even sign up for and get content from Netflix on Apple devices, with Apple getting its standard cut of such transactions. But these days, while you can still watch Netflix on an iPad or iPhone, transactions are made on an external site, which means Apple doesn’t get to dip its beak. And, the Times writes, “Netflix has decided to opt out of the Apple bundle, which will upsell subscriptions to HBO and CBS in addition to its original programming. Netflix’s absence from the new platform says a lot about the state of play in the highly competitive streaming industry: a fight is brewing over how content is distributed.”

(FYI…the New York Times and Washington Post reportedly also have decided not to be part of the bundle, apparently because they were not happy with the financial terms. The Wall Street Journal, however, is said to have opted in.)

Netflix CEO Reed Hastings says that it is all about having some control over the service: “We want to have people watch our service — or our content on our service. And so we’ve chosen not to integrate into their service, because we prefer to have our customers watch our content in our service.”

The Times explains it this way: “Netflix is a service, or a pipe, that would sit on another service, or pipe, if it agreed to be included in the Apple bundle. And if it had joined forces with Apple, Netflix also would have received little to no data about who is subscribing or watching its stuff. Further muddying the company’s identity, from the Netflix point of view, would be the fact that Apple users who spooled up ‘Stranger Things’ or ‘Orange Is the New Black’ may not be aware that they’re watching a Netflix show. Retaining the brand is as important as owning the data … The companies are battling for credit card numbers, email addresses and direct access to consumers.”
KC's View:
I keyed in on this story today mostly because of the “owning the data” observation, which really is about “owning the customer.” I think this conversation has parallels in the retailing business, where I’ve argued - ad nauseam, according to some folks - that some retailers are actually giving their relationship with the customer away when they use services such as Instacart as a long-term solution to their e-commerce needs.

Customers are a retailer’s most precious commodity, and when they open the door and even allow for the possibility that they can be disenfranchised from that relationship, it is an enormous risk.

I will be curious to see how all these content wars play out. There is, it seems to me, an enormous possibility for viewer/consumer confusion. I currently have Netflix and iTunes and Amazon and CBS All Access (for “Star Trek: Discovery,” natch). I have online subscriptions to dozens of newspapers and magazines. Will this new Apple service streamline the process, or clutter it up? Will it force me to make decisions that I don’t need to make now? II’m betting yes.) And what will happen when Disney launches it own service, which will have access to all 20th Century Fox content? (I don’t even want to think about it.)

One thing I am pretty sure of - it isn’t going to be an easy time to be a traditional broadcast network or a legacy cable provider, because billions of dollars are going to be spent in making you irrelevant to the viewer/consumer continuum.

Which is sort of what happening to traditional/legacy retailers, when you think about it. (Me thinks we have come up with another metaphor…)