Apple’s ‘Quality Over Quantity’ Approach Pays Off at Oscars

Launched in 2019, Apple TV+ has opted for a more tactical approach to streaming than its rivals—Netflix, Amazon.com Inc.’s AMZN 2.56% Prime Video, Disney+ and AT&T Inc.’s HBO Max—which are locked in an arms race to create as much content as possible.

“It appears that Apple, due to a lack of library and [intellectual property] portfolio, has really tried to stick to quality over quantity,” said Michael Nathanson, a media analyst with MoffettNathanson.

After “CODA” premiered at the Sundance Film Festival in January 2021, Apple paid $25 million for distribution rights to the movie—a record for Sundance. It put the movie on Apple TV+ and in a limited number of theaters for a brief run.

Helmed by former Sony Television executives Jamie Erlicht and Zack Van Amburg, Apple TV+ has also made plenty of deals with big-name talent and companies including Julia Louis-Dreyfus, producer Ridley Scott and Imagine Entertainment.

Apple’s streaming offering is part of a push the company has made to diversify its revenue sources beyond iPhones and other hardware sales. Revenue from its services business, which includes Apple TV+ subscriptions, rose by about 24% to $19.5 billion in the October-to-December quarter.

While the streaming service, which costs $4.99 a month, makes up a small portion of those revenues, it has grown steadily since its launch. Revenue for Apple TV+ nearly doubled in its fiscal 2021, which ranges from October to September, compared with its fiscal 2020, to an estimated $2.2 billion, according to Toni Sacconaghi, an analyst for Bernstein.

Plenty of people have access to Apple TV+ without necessarily paying for it. Apple makes the streaming service available free of charge for three months to people who buy an Apple device. Apple hasn’t disclosed the number of subscribers for Apple TV+, and MoffettNathanson estimates that the service has about 12 million paying customers in the U.S.

Besides “Ted Lasso,” Apple TV+’s breakout original shows include “The Morning Show,” a look at the world of TV news with a high-profile cast headed by Jennifer Aniston and Reese Witherspoon, and the new dystopian workplace drama “Severance” directed by Ben Stiller and starring Adam Scott and Patricia Arquette.

Apple also has invested heavily in news and documentary programming, including a weekly show hosted by Jon Stewart.

Landing a hit show isn’t a guarantee of continued success for streaming services. A recent Wall Street Journal analysis of data from subscriber-measurement company Antenna showed that highly anticipated content helped draw large numbers of new subscribers, but only half of these subscribers stuck around for at least six months.

Apple occasionally gets into bidding wars for content. It has bested Netflix and others out for several high-profile projects, including “Killers of the Flower Moon,” a coming Leonardo DiCaprio movie directed by Martin Scorsese.

Unlike most of its rivals, Apple lacks a big library of content to mine for its streaming platform. HBO Max relies heavily on sister studio Warner Bros. for library fare, while Disney has a trove of content, from its old movies and shows to everything it absorbed when it acquired the 21st Century Fox entertainment assets—including “The Simpsons” and “Avatar.”

Amazon’s Prime Video made its own big content acquisition last year by purchasing the iconic movie and TV studio MGM in a deal valued at $6.5 billion. Apple looked at MGM but passed because it felt the price was too high, people close to the company said.

Instead, Apple has made some smaller deals, such as landing the rights to Charles Schulz’s Peanuts specials including “A Charlie Brown Christmas.”

Apple is also venturing into sports as a way to boost interest in its streaming service. It recently struck a deal with Major League Baseball for exclusive rights to a Friday night package of games.

In addition, Apple is among those kicking the tires of the National Football League’s “Sunday Ticket” package, which allows users to watch any game on Sunday, people familiar with the matter said. DirecTV is the current Sunday Ticket rights holder, but that deal will expire after next season.

—Bradley Olson contributed to this article.

Write to Joe Flint at [email protected]