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Netflix's (NASDAQ: NFLX) comfortable lead in the streaming space is about to be challenged by two powerful names: Apple (NASDAQ: AAPL) and Disney (NYSE: DIS).
Apple has been aggressively ordering content for its lineup, including a highly sought-after drama show with A-list stars. Disney reorganized its staff to place more focus on its upcoming streaming site and has a pending deal to buy megacontent maker Twenty-First Century Fox (NASDAQ: FOX) (NASDAQ: FOXA).
The effort and money that both companies are putting into their content strategies show that they aren't underestimating what it will take to compete with Netflix -- and that should scare Netflix.
Netflix has had a comfortable lead in the streaming space, but that could change in 2019. Image source: Netflix.
Apple aggressively adds to its content lineup
Apple was late to the content game. The company didn't release its first original series, Planet of the Apps, until last June. It was a reality TV show about app creators and debuted to lackluster reviews.
But while Apple may be years behind Netflix, it also has the cash to put into hiring the best talent and winning the bidding wars for the best scripts. Apple is expected to spend $1 billion on TV shows and movies in 2018. While this is significantly less than Netflix's $8 billion content budget, Apple is just getting started.
"We're making big investments," said Apple iTunes music chief Eddy Cue at SXSW (the South by Southwest conference) on March 12. "Money isn't an issue."
At the end of 2017, the tech giant scored a highly coveted drama series about people on morning talk shows, starring Reese Witherspoon and Jennifer Aniston. Apple is paying the stars upward of $1.25 million apiece for each of the 20 episodes, according to The Hollywood Reporter.
Other shows in the works for Apple include the true-crime series Are You Sleeping?, starring Octavia Spencer, known for her roles in The Help and Hidden Figures. Apple will also revive Steven Spielberg's sci-fi anthology series Amazing Stories for 10 episodes, with a reported $5 million budget per episode.
In total, Apple has more than 10 shows in the works but is focusing on quality rather than quantity, according to Cue. Last year may have been experimental as Apple got its feet wet with Planet of the Apps, but this year Apple isn't messing around. "We're completely all in," Cue said at the conference.
Disney reorganizes the company to focus on streaming
Disney is also going all in on content this year as it prepares to launch its streaming sites. On March 14, the company announced a company reorganization into four segments, including a new direct-to-consumer division that will house its streaming businesses. The reorganization comes as Disney prepares to absorb Twenty-First Century Fox, in a deal that's still awaiting government approval.