Apple Sees Virtual-Reality Headset as Its Next Big Thing

Apple’s development of virtual-reality content and software tools is central to creating experiences that give its future headset purpose. Its last major new product, the Apple Watch, was launched with about 3,000 apps but struggled to take off because tech reviewers said few of those apps were useful. Similar shortcomings have dogged Meta’s Quest virtual-reality headset, which surpassed 10 million sales last year, because many view it as a gaming device.

From its original Macintosh to its iPad, Apple has pursued products that attract a broad swath of potential customers and have an array of uses. It sold an estimated 240 million iPhones last year, accounting for about half of its $366 billion in total sales. To make the headset worthwhile, analysts said, it will need to have utilities that transcend the niche world of video games.

Tim Cook, Apple’s chief executive, has been talking about the potential of augmented reality for years. In 2016, he told investors that the company was investing heavily in it and considered it a “great commercial opportunity.” Around that time, many employees on Apple’s campus were reading “Ready Player One,” a futuristic novel about virtual reality, and talking about the possibilities of creating Apple’s own mixed-reality world.

Apple hired an engineer from Dolby Technologies, Mike Rockwell, and tasked him with leading the effort. His early efforts to create an augmented-reality product were hobbled by weak computing power, two people familiar with the project said. Continuing challenges with its battery power have forced Apple to postpone its release until next year, those people said.

The augmented-reality initiative has been divisive inside Apple. At least two members of its industrial design team said they had left the company, in part, because they had some concerns about developing a product that might change the way people interact with one another. Such sensitivities have increased inside the company amid rising public concern about children’s screen time.

With Mr. Rockwell at the helm, the product would be one of the first to come out of Apple led by its engineering team rather than its co-founder Steve Jobs, who died in 2011, and its former design chief, Jony Ive, who left the company in 2019. The Apple Watch project was led by Mr. Ive and his designers, who defined how it looked, operated and was marketed.

Mr. Favreau’s programming shows how Apple is trying to differentiate its product from Meta’s. It also illustrates how the company is tapping into the relationships it has cultivated in Hollywood since starting Apple TV+ in 2019.

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Netflix’s Stumble Could Be a Warning Sign for Streaming Industry

Many entertainment executives, tired of playing catch-up to a Silicon Valley interloper, have been waiting for the comeuppance of Netflix. But this may not have been the way they hoped it would happen.

Netflix said this week that it lost more subscribers than it signed up in the first three months of the year, reversing a decade of steady growth. The company’s shares nose-dived 35 percent on Wednesday while it shed about $50 billion in market capitalization. The pain was shared across the industry as the stock of companies like Disney, Warner Bros. Discovery and Paramount also declined.

Netflix blamed a number of issues, ranging from increased competition to its decision to drop all its subscribers in Russia because of the war in Ukraine. To entertainment executives and analysts, the moment felt decisive in the so-called streaming wars. After years of trying, they may see a chance to gain ground on their giant rival.

But Netflix’s stunning reversal also raised a number of questions that will have to be answered in the coming months as more traditional media companies race toward subscription businesses largely modeled after what Netflix created. Is there such a thing as too many streaming options? How many people are really willing to pay for them? And could this business be less profitable and far less reliable than what the industry has been doing for years?

advertising-supported tier in the next year or two. Netflix also said it would crack down on password sharing, a practice that in the past it said it had no problem with.

“We’ve been thinking about that for a couple of years, but when we were growing fast it wasn’t a high priority to work on,” Mr. Hastings said. “And now, we’re working superhard on it.”

Netflix has no advertising sales experience, while rivals like Disney, Warner Bros. Discovery and Paramount have vast advertising infrastructure. And the password crackdown led some analysts to wonder whether Netflix has already reached market saturation in the United States.

Mr. Hastings tried to reassure everyone that Netflix had been through tough times before and that it would solve its problems. He said the company was now “superfocused” on “getting back into our investors’ good graces.”

Brooks Barnes contributed reporting.

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MGM Looks to Amazon as the Hollywood Studio Tries to Find a Buyer

Streaming has become fiercely competitive, with Disney+ coming on strong and HBO Max, Apple TV+ and Paramount+ determined to make inroads. That has pushed the original streaming disrupters — Netflix and Amazon Prime Video — to lean harder on broad-appeal movies to keep growing, particularly overseas.

The 58-year-old James Bond franchise is a Hollywood crown jewel that has generated tens of billions of dollars in ticket sales, home entertainment revenue, video games and marketing partnerships. But 007 has been both an enticement and a deterrent to prospective MGM bidders.

That is because MGM owns only 50 percent of the spy franchise. The balance is held by Barbara Broccoli and her brother, Michael G. Wilson. Through their company, Eon, which stands for Everything or Nothing, the siblings also have ironclad creative control, approving every line of dialogue, casting decision, stunt sequence, TV ad, poster and billboard. Bond has enormous untapped value, with television offshoots as one potential bonanza. But Ms. Broccoli and Mr. Wilson, worried about adulterating the brand, have blocked spinoff efforts in the past: Bond belongs on big screens, not small ones.

“If we get the wrong partners, there are liable to be conflicts,” Mr. Wilson said in a 2015 interview.

“No Time to Die,” the 25th installment in the Bond series, cost about $250 million to make and is scheduled for pandemic-delayed release in theaters on Oct. 8. (The previous film, “Spectre,” took in about $900 million worldwide in 2015.) The role of James Bond is expected to be recast after “No Time to Die,” as Daniel Craig leaves the role after 15 years.

Amazon’s entertainment strategy has evolved as streaming services have proliferated. Indie films like “Manchester by the Sea” and unconventional shows like “The Marvelous Mrs. Maisel” and “Transparent” gave Amazon a foothold in Hollywood; domination will require a steady supply of mainstream hits.

The problem: Amazon Studios has limited bandwidth, most of which is tied up with television series — including a coming “Lord of the Rings” adaptation that is believed to be the most expensive show ever made, with a one-season budget of $465 million. To stock its shelves with big movies, Amazon has been turning to outside suppliers. It paid $125 million for the rights to “Coming 2 America” and $80 million for “Borat Subsequent Moviefilm.” In July, Amazon will release “The Tomorrow War,” a science-fiction spectacle it bought for $200 million.

Nicole Sperling contributed reporting.

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AT&T’s WarnerMedia Group to Merge With Discovery

It’s as if Logan Roy, the fictional patriarch of the Waystar Royco media empire on HBO’s popular series “Succession,” masterminded the deal himself: AT&T has thrown in the towel on its media business and decided to spin it off into a new company that will merge with Discovery Inc.

The transaction will combine HBO, Warner Bros. studios, CNN, TNT, TBS and several other cable networks with a host of reality-based cable channels from Discovery such as Oprah Winfrey’s OWN, HGTV, the Food Network and Animal Planet.

But it raises numerous questions about what that will mean for popular shows and streaming platforms, whether entertainment bills will go up or down, or what will happen to the people working at WarnerMedia and Discovery.

WarnerMedia is known for producing some of the industry’s biggest theatrical and television hits.

HBO last year captured more Emmys than any other network, studio or platform, and its hit shows include “Succession,” “Curb Your Enthusiasm” and “Last Week Tonight With John Oliver.” It also has a huge library that includes “The Sopranos,” “Game of Thrones” and “Sex and the City.”

Netflix, the industry leader, has over 200 million subscribers, and everyone else is far behind.

Both WarnerMedia and Discovery have invested heavily in streaming. WarnerMedia has spent billions building HBO Max, which together with the HBO cable network has about 44 million customers. Discovery has 15 million global streaming subscribers, most of them for its Discovery+ app.

The companies plan to invest more in both services to get those numbers much higher. David Zaslav, the chief executive of Discovery, who will run the new business, said on Monday that he envisioned hundreds of millions of subscribers around the world, but that will be tough as Netflix and Disney invest in new shows of their own to keep a grip on the market.

Jason Kilar, who was hired to run AT&T’s media group only last year, is most likely on his way out. He was kept in the dark about the deal until a few days ago, and he has hired a legal team to negotiate his departure, according to two people briefed on the matter.

But it could mean the elevation of other executives within WarnerMedia. On Monday, Mr. Zaslav praised Toby Emmerich, the head of the film division, Casey Bloys, who runs HBO, and Jeff Zucker, the leader of CNN. Mr. Zucker and Mr. Zaslav are also longtime golfing buddies.

When asked about his plan for the management team, Mr. Zaslav said he would not favor Discovery executives.

“Philosophically, our view is we don’t know better,” he said. “There’s a reason WarnerMedia is where it is today.”

The companies expect the deal to be finalized in the middle of next year, and they anticipate annual cost savings of $3 billion. That usually means layoffs are coming.

WarnerMedia already went through several rounds of deep staff cuts after AT&T’s purchase of the company in 2018 as Mr. Stankey, who led the unit for a time, slimmed down the operations. Executives and managers were let go as he combined HBO, Warner Bros., CNN and the other cable networks under a single management team.

When Mr. Kilar came aboard last year, he cut further. Over 2,000 employees were laid off in the process.

To realize $3 billion in cost savings will inevitably mean more layoffs — at both WarnerMedia and Discovery. Mr. Zaslav said there was “a treasure trove of talent” at WarnerMedia, and emphasized the fact that Discovery doesn’t make scripted shows.

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AT&T, in Abrupt Turn, Will Shed Media Business in Deal With Discovery

The merger is a significant about-face for AT&T, a telecommunications giant that got into the media business with its Time Warner foray. Industry experts questioned AT&T’s deal, and now the spinoff indicates a failed acquisition strategy.

John Stankey, the chief executive of AT&T, has looked at its media business as a way to keep its phone customers from switching to other companies. AT&T Wireless subscribers get discounts and free access to HBO Max. A deal with Discovery could include stipulations that customers would maintain those benefits.

Before he took over as chief executive last year, Mr. Stankey was the company’s chief mergers strategist. But his track record has been spotty. In addition to planning AT&T’s purchase of Time Warner, he was behind the company’s $48 billion acquisition of the satellite operator DirecTV in 2015. The service has been bleeding customers for years; in February, AT&T sold part of the business to the private equity firm TPG for about $16 billion, a third of what it originally paid.

For Discovery, the WarnerMedia deal could finally give Mr. Zaslav the size and scale he has long sought. A swashbuckling executive who can recall ratings figures off the top of his head, Mr. Zaslav represents the last of the old guard in media, a hobnobbing mogul known for hosting lavish get-togethers at his house in the Hamptons.

The new company would create a new kind of media behemoth, one that is still living off the fat profits of old-school cable, while spending those profits (and more) on streaming.

Even with increased competition, HBO remains a standout in television, and last year, once again, captured more Emmys than any other network, studio or platform, including Netflix. It has several hit shows, including “Succession,” “Curb Your Enthusiasm,” “Barry” and “Last Week Tonight With John Oliver.” It also has a huge library that includes “The Sopranos,” “Game of Thrones” and “Sex and the City.”

The Warner Bros. TV studio likewise has produced successful shows for both its parent company, WarnerMedia, and outside studios with series like “Ted Lasso” (Apple TV+), “Riverdale” (CW), “The Flight Attendant” (HBO Max) and “The Bachelor” (ABC). The Warner Bros. movie studio recently released movies like “Godzilla vs. Kong,” “Mortal Kombat” and has big coming releases like “Dune” and “The Matrix 4.”

Brooks Barnes and Lauren Hirsch contributed reporting.

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