Not sure if you were following the news much over the last little while but it turns out Apple is a pretty big company.
The biggest, in fact. After 20 years of anticipating and shaping the effects of technology on consumer demand, and 20 weeks of investors looking for safe places to put their money in the middle of a global pandemic, Apple last week became the first American company to attain a US$2 trillion valuation. Currently, it is the only company anywhere in the world beyond that barrier.
Another thing about Apple: at this point, despite being one of the most culturally significant organisations of this century, it also has very little direct contact with the sports business.
The first of those facts is unlikely to change very soon. The second is open to speculation.
You all know the story: since a reboot after the late Steve Jobs’ return at the end of the 1990s, Apple has built a strategy on premium products, intuitive design, and a sealed ecosystem that keeps consumers upgrading for years at a time. The owner of one Apple device is often the owner of several, with people more or less running their lives within that universe.
It has also developed a telling knack, albeit not a perfect track record, for understanding when technological advance and behavioural change are about to converge. So it is tempting to look across the sports industry and wonder whether, after Apple rode disrupted currents to success through personal computing, communications, and the consumption of music and mass entertainment, it might be interested in repeating the trick in sport.
There are reasons to suspect it would not be. One is scale. That valuation, at a conservative estimate, makes Apple worth three or four times as much as the entire global sports industry. Its market share and control of its environment, despite a recent challenge from Fortnite publisher Epic Games, makes it a powerful audience gatekeeper anyway.
But the stirrings are there. In June it hired former Amazon Prime Video sports lead James DeLorenzo, with a brief, according to Recode Media, to build out its own sports offering. The Wall Street Journal reported talks with the Pac-12 college sports conference last December over becoming its primary rights holder. According to Pocket Lint, the live and library sport available through Apple TV is now curated by a small, dedicated team.
The companies with which Apple is so often bracketed have either shown their hand or have sports strategies that are easily divined from their activities elsewhere. Amazon is buying live sports rights to add value to its Amazon Prime membership scheme, enrich its datasets, and create new points of contact with consumers in its efforts to sell everything to everyone all the time.
Netflix is an entertainment media provider, less interested in live action and building the complex legal and technical infrastructure to sustain it, but very taken with the potential of original content. Facebook and Google make most of their money selling advertising. Both have flirted with live partnerships, especially in amplification via Facebook Live and YouTube, but any and every form of engagement has some value.
Apple can be an awkward fit with these four, and not just because of how awkwardly it elongates that FANG acronym. It is a pre-internet company, straddling the eras of ‘think hard and make things’ and ‘move fast and break things’.
There is a long list of technologies it did not invent, but popularised: the graphical user interface, the MP3 player, the touchscreen, the tablet computer and, latterly, wireless headphones and the mobile-connected watch. This is often a creative company, but it is rarely a first-moving innovator.
Nevertheless, the challenges it faces in the next decade are not those of the last two. The global smartphone market is saturating and the rate at which users are willing to upgrade has slowed. Many of Apple’s product lines compete with each other in terms of market share and user attention – think laptops and iPads, iPhones and Apple Watches. Now, more than ever, it is thinking about its role at the centre of its consumers’ lives.
The focus has moved from shifting units to running services. Apple wants to provide recurring value through media platforms that are exclusive to its products, run seamlessly across them, and are either better than competitors or good enough alternatives within its whole package. Apple TV+, Apple Music, mobile gaming platform Apple Arcade, and Apple News all fit that description.
Each of those makes a similar promise, aggregating content at a low-ish monthly cost, but each also exists in industries with very different models. Any version of Apple Sports would be playing off another set of dynamics altogether, where the cost of differentiating through live rights acquisitions is high and fans are unused to paying for anything else.
One approach would be to create a place for smaller rights holders and media companies to shelter alongside limited offerings from the elite. A bigger impact would need a bolder approach.
Per its latest filings, Apple is sitting on somewhere over US$200 billion in cash. Not all of that is readily available – they may believe in a straightforward user journey over in Cupertino, but that simplicity does not extend to the company’s accounts. Still, even allowing for monies squirrelled away in securities, committed to future stock buybacks or passed overseas to reduce tax liabilities, there is probably something left in the coffers.
Moving into the live rights business, then, is financially plausible, but Apple is some way behind – as far as we know – in terms of relationships and expertise. Catching up could mean finding a shortcut. While it may not have a reputation for big-money purchases, Apple will spend to bring in new technologies or open routes to new markets. The US$3 billion takeover of headphone brand Beats in 2014 is the highest-profile case in a recurring trend.
If it is serious about live sport, Apple might be interested in a company with a broad, global set of live rights that has gone some way towards solving the problems of international, digital-first distribution. To pick a provocative and strictly hypothetical example, how much more than US$3 billion would it cost to land DAZN? The over-the-top (OTT) pioneer is on the hunt for funding after a difficult few months. It also believes it has broken new ground in a Spotify-style, profit-share restructuring of its long-term rights partnership with Japanese soccer’s J-League.
There is every chance, though, that Apple will approach its relationship with sport from another angle. It now has a huge lead in the wearables market through Apple Watch and, especially, its AirPod headphones. That could drive changes in consumption, while it has only begun to explore the ground around physical activity and digital health monitoring - a huge, competitive growth area, for better or worse.
In May, meanwhile, it bought virtual reality streaming specialist and NBA partner NextVR for a reported US$100 million. Apple is in a race towards a future where another generation of interfaces has the same impact that touchscreens had a little over a decade ago. In that context, even if it does not have a formal relationship with sports organisations, it could have a massive influence on the industry all the same.
The old ‘think different’ mantra may not mean what it used to but this is still a company that goes its own way – one that is as much about alternative routes to profit as alternative products. The way it goes in sport could yet tell us plenty about the years ahead.