Based on information provided in the case and considering all aspects of organizational structure (e.g., type of structure, level of centralization in decision-making, tall vs. flat hierarchy, etc), what overall organizational structure and design would you recommend for Apple Inc.? Why? (8 marks) Was Apple Inc.'s decision to launch Apple TV+ a programmed or a non-programmed decision? Why? (2 marks) Just how big in media does Apple want to be?: The accidental mogul 1) Apple Inc, the world's most valuable company can afford a few jokes at its own expense. In the past year the tech colossus has raked in $366 billion in revenue, a third more than in 2020. On January 3rd its market capitalisation briefly exceeded $3 trillion. 2) Apple's dabbling in media is no joke. Though it lags well behind Netflix and the like, Apple has enough money to ride out the increasingly expensive streaming wars, which threaten to bankrupt other players. One question keeps its rivals awake at night just how big in media does Apple want to be? 3) Apple became a big noise in music when it launched iTunes almost exactly 21 years ago. It took a cut of songs' sales and shifted hundreds of millions of iPods for people to play them. Later, iTunes sold movies too, and the firm hoped to make the same model work in television, where the market is an order of magnitude larger than music. But paying for downloads was superseded by all-you-can-eat subscriptions, pioneered by Spotify in music and Netflix in TV. Unlike downloaded music or films, subscriptions could be easily transferred between platforms. So Apple, seeing little opportunity to lock consumers into its devices, initially sat out the streaming revolution. 4) Today it is back in the media game. Apple Music, launched in 2015, is the second-largest streamer after Spotify. Apple TV+, now two years old, is the fourth-largest video service outside China by the number of subscribers, according to Omdia, a data company. In the past couple of years Apple has made smaller media bets including Arcade, a subscription gaming package, News+, a publishing bundle, and Fitness+, which offers video aerobics classes. There is talk of an audiobooks service later this year. 5) Like Amazon, another tech giant with a sideline in media, Apple has been able to roll out its offerings more quickly in more countries than most of its Hollywood rivals, which have had to build direct-to- consumer businesses from scratch. And it can afford to be generous with free trials: less than a third of Apple TV+ subscribers pay for the service, omdia believes. It has had some hits, notably Ted Lasso, which won a string of Emmy awards in September. But it lacks a back-catalogue, leading to high rates of customer churn. Smaller competitors like Paramount+ (part of ViacomCBS) and Peacock (from NBCUniversal) have limited new offerings but decades-old libraries. 6) Old-media firms have been puzzled by Apple's on-off approach to expanding into their territory. Winning at streaming depends mainly on splurging on content. But deep-pocketed Apple spent just over $2 billion on film and tv in 2021, against Amazon's $9 billion and Netflix's $14 billion, estimates Ampere Analysis, a research company. It doesn't bother to market its efforts much. 7) Indeed, while Hollywood frets about Apple's next move, many in Silicon Valley wonder why the company is in media at all. None of the markets is a big prize for the world's most valuable firm. The entire global recorded music industry had sales of $22 billion in 2020, less than Apple made just from selling iPads. In about a month Apple generates as much revenue as Netflix makes in a year. Apple's TV business depends on buying shows, rather than extracting revenue from others' creations as it did in the iTunes days (and as it still does in its app store). 8) So why is Apple bothering with its media business? Streaming subscriptions may not lock people in as strongly as iTunes purchases did, but Apple's streaming service makes customers spend more time with their devices and makes it a bit more inconvenient to leave Apple's ecosystem, says Nick Lightle, a former Spotify executive. The iPhone itself, which generated $192 billion in sales in the past year, more than half of Apple's total revenues, is sold as a sort of subscription, points out Mr. Evans. Anything that reduces churn among iPhone subscribers by even a small amount is likely to pay for itself. 9) Media also makes good marketing. Producing films with Steven Spielberg and Tom Hanks reinforces Apple's premium brand. Partnerships with pop stars keep it cool. And at a time when Silicon Valley is under attack for monopolistic practices, invasion of privacy, subversion of democracy and more, Apple is churning out worthy podcasts by Malala Yousafzai, a Nobel laureate, and teaching fitness routines to children. Not many companies can think of a film studio as a public-relations arm. A $3 trillion company can. 10) Apple is not playing the same game as many of its other [media] competitors," says Julia Alexander of Parrot Analytics, another data firm. For single-business rivals like Netflix, it is an uncomfortably difficult competition. Yet Apple's broader priorities can also hamstring its media ambitions. Apple TV+'s lack of a library could be solved by buying someone else's; the firm has been touted as a potential buyer of small studios like Lionsgate as well as giant ones like Disney. But Apple may be wary of provoking America's Federal Trade Commission (FTC), which has its sights on Silicon Valley. If you're Apple and the FTC is looking at big tech, the last thing you want to do is make a huge acquisition, notes Ms Alexander. Lina Khan, the FTC's tech-bashing head, is examining Amazon's recent $8.5 billion purchase of MGM Studios. As companies vie for control of tech's next commanding heights, from decentralised Web3 to virtual reality, attracting the attention of regulators by buying old TV episodes could be a strategic error. Adapted from: Just how big in media does Apple want to be?: The accidental mogul. (2022, Jan 02). The Economist (Online), http://libproxy.mtroyal.ca/login?url=https://www.proquest.com/magazines/just-how-big-media-does-apple-want- be/docview/2616049242/