Reports indicate that a budget of approximately $1 billion has been set aside by Apple with a view to procuring and producing original video content in the course of the next one year. With the Cupertino, California-based tech giant enjoying a global reach and a formidable marketing clout, Apple is expected to emerge as a serious competitor in a market that is already crowded as traditional media firms and new media players vie to acquire original video content.

According to sources it is expected that about ten television shows could be acquired and produced by the iPhone maker. This would help fulfil the vision of Eddy Cue, a senior executive at Apple, of providing high quality video entertainment similar to HBO’s. The content is likely to be made available on Apple’s music streaming service, Apple Music, or an entirely new service focused on video.

Hollywood veterans

Apple’s budget for original video content will be under the control of Zack Van Amburg and Jamie Erlicht, two Hollywood veterans that Apple poached mid this year from Sony Corp. The two, who began working from the Los Angeles offices of Apple this month, will be expected to be in charge of video strategy and content acquisition.

In the video business Apple will have to fight it out with the likes of Netflix and Amazon who already have a head start and bigger budgets for original programming. Apple will also be at risk of jeopardizing the 15% cut it gets from subscriptions of video services offering by HBO Go and Netflix through its app stores.

One hit needed

The costs of making an episode is estimated to be $2 million for a comedy show while it can reach $5 million for a drama. Some popular shows like Game of Thrones are more expensive and the cost is higher than $10 million an episode.

Netflix’s budget for original programming is this year expected to reach $6 billion. The popularity of the video streaming firm reached another notch when it debuted its original show, House of Cards a few years ago. If Apple is to succeed in video streaming it will required one hit at least.