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Apple (AAPL) Boosts Content Portfolio With Animal Pictures Deal

Zacks Equity Research
·3-min read

Apple AAPL TV+ recently announced that the company has signed a new deal with Maya Rudolph's production company Animal Pictures for new shows.

The recent deal comes right after Apple TV+ debuted its new comedy series Loot, starring Maya Rudolph, last week.

The first-look deal gives Apple TV+ exclusive access to all TV series and digital films in production at the Animal Pictures studio first and the first right to refusal as well. Animal Pictures can shop its product to other potential buyers in the industry only following a refusal by Apple.

Apple has previously inked similar deals with other production companies as the company is investing heavily to build its content portfolio. Deals with other notable production houses include Scott Free Productions, Appian Way, Sikelia Productions and Green Door Pictures, to name a few.

Apple Inc. Price and Consensus

Apple Inc. Price and Consensus
Apple Inc. Price and Consensus

Apple Inc. price-consensus-chart | Apple Inc. Quote

Apple's Contract Strategy Driving Market Share

Apple's new deal with Rudolph's production house exhibits the company's strategy to beat the competition by winning market share in an already saturated market. The company is signing first-look deals with notable production houses, which is giving Apple access to content earlier than its competitors like Netflix NFLX and Disney DIS.

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Every major streaming company is trying to win market share with original and new content. Apple being a more cash-rich company than its peers, is capitalizing on the advantage by blocking access to its peers, which is especially hurting companies like Netflix.

Netflix enjoys the leading position in the streaming industry. The company has been spending aggressively to build its original content portfolio. However, in its first-quarter 2022 earnings, NFLX reported that it has lost customers for the first time in a decade due to stiff competition.

Apple has been expanding its genre base to attract varied viewers, as evident from its foray into the live sports streaming space. Apple TV+ has won exclusive rights to broadcast Major League Soccer ("MLS") worldwide starting from 2023 for 10 years.

However, Apple is facing stiff competition from Disney and Amazon AMZN in the live sports streaming space.

Disney primarily dominates the live sports streaming space with its ESPN, which is home to several live sporting events like the F1 race, La Liga, Bundesliga, UEFA Champions League and the NBA.

Another major contender in the live sports streaming space is Amazon, which is well ahead of Apple in this race.

Amazon signed a long-term deal with the National Football League (NFL) that makes its streaming service — Prime Video — the exclusive broadcaster of Thursday Night Football, beginning with the 2022 season.

Apple's shares have been negatively impacted by the ongoing COVID-induced lockdowns in Shanghai, global supply chain disruptions, the Russia-Ukraine war, rising inflation and Fed's rate hikes. These macro-economic events have made the share market extremely unpredictable and volatile. This is quite evident from the performance of the Nasdaq Composite index, which is filled with tech stocks.

Apple's shares have fallen 20.7% in the year-to-date period compared with the Zacks Computer - Mini computers industry's decline of 19.7%.

However, Apple TV+'s lower price compared with its competitors in the United States and the first-look deal strategy that helps expand Apple TV+'s content portfolio are expected to attract viewers from its competitors. This is likely to drive Services revenues, which will impact shareholders' wealth positively in the long run.

Apple currently carries Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.


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Zacks Investment Research