The Apple Universe
How is Apple like Marvel? How far can I stretch a metaphor?
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This issue is a bit more of an exploratory lark than usual. I just switched back to iPhone after a couple years with a Pixel (I’ll be sharing some of my product thoughts about the experience on Twitter next week), and the concept occurred to me as I set up my new phone. Bear with me here.
Apple is often described as a hardware company, as opposed to companies like Google or Microsoft that are primarily seen as software companies. The line goes that while Apple is great at designing their hardware, the focus on hardware leads to a larger set of challenges, tougher margins, and more risk.
While those may be true, there’s another framing I want to look at. What if we consider Apple as a content company building their own universe akin to the MCU? What can we learn about their business that way?
Universal Appeal
I’ve talked before about the risks of creating content and the spikiness of success. In that piece, I suggested that being a platform is a safer idea. That’s still true, but if you’re going to insist on making content, there are at least ways to give yourself better odds.
In the media business, if you can set up a universe, you’re golden. Everyone talks about the Marvel Cinematic Universe, but the idea’s been around much longer than that - Mickey Mouse shares a universe with his friends. There’s Pokemon, Star Wars, Mario, and many more. Marvel even had a universe in comics way before it was ever on the big screen.
Building on good IP is an exec’s dream. [1] Who wouldn’t take the low-risk shot of bringing back a huge success with a pre-built audience for a sequel? The problem with film sequels is there’s only so far you can take someone’s story without rebooting them or getting ridiculous. Sequels can get stale when they’re tacked on. If our hero solved the biggest problem in their world in part one, what the heck are they supposed to do next? And then again and again for three more sequels?
Universes avoid that staleness and offer new directions for growth. They build off the appeal of that IP, but let the creators focus on different parts of their world, tell different kinds of stories, [2] and sometimes weave in a broader narrative. It’s hard to argue with the financial and marketing success. Between Infinity War and Endgame, Avengers maintained a year of nonstop hype. No one was surprised to see them take the box office record [3] as people rushed to theaters to see the culmination of 12 years of movies. Beyond the ticket sales, the value it provided Disney through merchandise sales, rewatches of the previous films, and setup for future endeavors like the Avengers Campus at Disneyland Resort must be staggering. [4]
Not pictured, the true heroes here: Kevin Feige & Bob Iger (Forbes)
Universes allow studios to mitigate some of the risky business of making a film by building its value off of multiple products, while providing value to future products. Each piece of the universe strengthens every other.
As I look at my new iPhone and think about why I bought it, I wonder: did Apple build a universe? Are they a content company? [5]
The Apple Universe
Consider this: Apple puts out an iPhone out on a yearly schedule, supported by a massive marketing machine, and much of their success as a company is tied to getting people to buy in–iPhone sales make up an estimated 40% of their revenue. They have good reason to expect to do well, but a miss on even a single year’s release would be a concern.
To support sales, they have to innovate every year. It needs to be fresh & exciting, not just an upgrade of the old phone. Content works this way too. You couldn’t just upgrade a few plot points in Iron Man and release it as a new movie.
They get advantages from having a built-out universe & brand. Compare your expectations for an iPhone launch versus some unknown brand releasing their new flagship. This is also true in film, so much so that execs sometimes repackage stand-alone scripts to fit into existing franchises–see most of the movies Die Hard series, for example. [6]
There are additional devices & services to strengthen the ecosystem. Sub-franchises like the Apple Watch have emerged. They all have different functions and can appeal to different use cases, but there’s a huge class of superfans that have bought into the entire thing. Apple can build hype and keep users engaged with new releases throughout the year, just like Marvel does.
There are strong network & social effects. Apple leans into these to build a wall around their products. The biggest example is iMessage–I was kicked out of group chats for turning them into green bubbles. Apple has also built helpful, connective features like AirDrop or Wifi password sharing. Beyond that, iPhone’s built a strong brand as the premium phone in the US, so lots of people interpret your device choice to say something about you. If you’re not an iPhone user, people look at you funny.
Lots of tech companies build ecosystems, Google & Microsoft included. Users generally don’t feel as strongly about being a part of them though, and that’s what keeps me from considering them in the same plane as Apple’s universe. Sure, users recognize the usefulness of Google Calendar pulling in events from Gmail, but consistent feature upgrades don’t match the buzz a new product launch gets. That hype is the secret. Apple gets to constantly reaffirm devotion to their universe.
The equivalent of revealing your first trailer during the Super Bowl. (9to5Mac)
If Apple announced that they’d stop making iPhones next year, with no replacement device, what would happen to their stock price? It’d be worse for them than if, say, Google announced the end of Pixel.
Far From The Tree
Obviously, Apple as a content company is not a perfect comparison:
Apple’s universe is more robust, because the set of services and devices create a longer lasting relationship than a film. Once you get someone using an iPhone, you get to engage with them repeatedly through the life of the device. iPhone as a share of Apple’s overall revenue has been decreasing as they push more into services.
Users don’t have to get each and every device in the same way they’d want to see every Marvel film to stay up to date. That said, Marvel films can still be watched well after they come out, but relatively few people are going back to buy an older iPhone.
Picking a device universe is also fairly exclusive. Most users don’t have both an Android & an iOS phone. (Many Marvel fans choose not to follow the DC Extended Universe, but that’s just because of film quality. I’d happily watch a good Justice League movie if they ever made one.)
Applesauce
If I apply the MCU model to Apple, here’s what stands out. The growth in Apple’s services business is really important, but they can’t lose the focus on iPhone just yet. iPhone is the heart of the whole universe, like Iron Man and Captain America once were for Marvel. It’s the entry point and the big draw.
The powerful thing about building out the services business, though, is that it allows them to gracefully step to a new platform once mobile phones have run their course. Marvel finished Iron Man & Cap’s stories, but gracefully shifted focus to players like Thor. Marvel had a lot of runway to bring him up with the support of the universe behind them. Apple has the same opportunity and has started to elevate products like Apple Watch.
I’d also say Apple’s not in danger of users losing interest in new iPhones anytime soon. For a long time, people have speculated about superhero fatigue among viewers, and Marvel has continued to show there’s no such thing. As long as Marvel keeps it fresh by building out the universe and finding new stories to tell about their characters, users stay bought in. As long as Apple keeps building their universe and adding new bells & whistles, iPhone fatigue is also unlikely to set in. The only thing that will stop the iPhone are major issues in Apple’s execution or if society reaches some paradigm shift where smartphones lose relevance entirely.
Overall, there’s a reading here that Apple is actually better positioned than companies like Google to continue their consumer success in the future. [7] Sure, their risks are higher for each individual product they put out, but their strategy gives them power to weather whatever shocks may come in the future and come out on top. Apple’s universe gives them the momentum to power through and the flexibility to adapt.
Plus, they’ll make more revenue than Google all along the way. [8]
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[1] IP technically means intellectual property, but in entertainment, it’s generally used to refer to pre-existing properties.
[2] Batman & Superman comics get different types of stories, appealing to different kinds of readers. Some fans will just read their favorite heroes.
[3] Nominally. Gone With The Wind still wins Wikipedia’s inflation-adjusted tally, followed by Avatar, Titanic, and Star Wars. Accounting for inflation is tricky, though: should it be relative to ticket prices or the CPI? How do you account for different ticket price increases in different regions? Or premium tickets like IMAX or 3D?
[4] Unfortunately, I couldn’t find any analysis or estimated numbers for this, but would love to see if anyone has a source!
[5] Obviously, Apple does literally make content now with TV+. They started out a bit rough–did anyone watch a single episode of Planet of the Apps?–but they seem to be hitting their stride. As far as Ted Lasso goes, there only seem to be people who love it and people who haven’t watched it.
[6] In fact, at one point Die Hard With a Vengeance was intended to be Lethal Weapon 4.
[7] Google’s future proofing has mainly been in the arena of its bets through X.
[8] In the interest of length, there’s a lot I cut from this peice. However, if you think this is an interesting line of analysis, let me know. I also have more to say about how content businesses work and Hollywood’s reliance on IP, especially universes.
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