With Apple entering originals, has digital arrived?

Rapper Dr. Dre arrives at the premiere of Universal Pictures and Legendary Pictures' 'Straight Outta Compton' at the Microsoft Theatre on August 10, 2015 in Los Angeles, California.
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For much of its 40-year history, rumors have swirled that Apple would enter the entertainment industry. Would it buy a movie studio? A music company? When would it start making its programming? Now, it looks clear that plans to create its own original content have been set in motion.

Earlier this month, the tech giant was reported to be working on a show with Dr. Dre, according to Variety. It also tapped a former AMC and Viacom public relations executive to lead communications around content initiatives. Dre is a co-founder of Beats, which Apple acquired in 2014.

Apple may be a force in the industry, but it will still probably face an uphill battle. While platforms like Netflix, Amazon and Hulu have led the way allowing for new digital voices to be heard in the Hollywood landscape, insiders say digital is promising but it's not quite where traditional TV and film distribution are yet.

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Meanwhile, other digital players, like YouTube Red, are making their moves towards the mainstream. Awesomeness Films has produced two upcoming films that it hopes will be competitive with the rest of the Hollywood films out there. "Before I Fall" is based on the best-selling young adult book series by Lauren Oliver. The script for "Shovel Buddies" was on the 2013 Black List, which also included the scripts for "Cake" and "Spotlight" that year.

"When you're at a traditional studio, it becomes very difficult to be as nimble than at a new digital studio such as ourselves," said Matt Kaplan, who left film and TV studio Lionsgate to run AwesomenessTV's new film studio, Awesomeness Films. "We're able to be opportunistic with the content we make and the distribution we choose to partner with."

Digital platforms also are more likely to buy a full season of a series rather than commit to just a one-episode pilot.

That said, it's hard to deny that ultimately for many top-level producers and writers, the ultimate goal at the end of the day still remains to get on TV or in theaters. Even series creators of shows like "Broad City" and "High Maintenance," which developed a large following online, still sought television deals. Vimeo's "High Maintenance" will be moving to HBO for its second season, which will tentatively air in 2016.

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Part of the reason is because when it comes to awards, they are still skewed towards giving a leg up to projects that were distributed through traditional means, said independent film marketing consultant David Weitzner, who is the former president of worldwide marketing for 20th Century Fox and Universal Pictures.

While shows like "House of Cards" and "Transparent" are often held up as examples of digital series that have won major awards, rules make it hard for most to qualify. "Weight" won a specifically designated Writers Guild Award category for online projects, and the 12-minute pilot length would not qualify it as a TV series. Meanwhile, to qualify for the Academy Awards, a film still requires an opening week theatrical run in Los Angeles before appearing on other platforms.

Weitzner, who is a member of the Academy, believes that is what hurt films like "Beast of No Nation." Although Netflix did follow the Academy Awards qualifications rules, he said that because it was mainly distributed through digital means many voters dismissed it.

"The film was largely ignored by the academy voting members because it was on Netflix and didn't receive a wide theatrical distribution," he said. "It breaks my heart because I believe some of the performances in that film were spectacular and deserved to be recognized."

Also, the audience still remains a lot younger, said Gary Binkow, chief content officer of Studio71. He previously produced movies like "Finding Neverland" and "The Nanny Diaries."

"Digital is still the ugly stepchild, but if you're trying to reach a millennial or younger millennial audience, they're not watching linear television. They don't have cable. If you are trying to reach 40- and 50-year-olds and they are not on digital platforms," he added. "However, I think the lines are being blurred by platforms like Netflix."

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On top of that, the digital revenue model just isn't as lucrative as TV, a lot of which is reliant on advertising. Digital platforms mainly rely on a subscription model, meaning lower budgets for projects. Or, companies can choose to fund fewer projects, which also cuts into their potential profits.

"It's a difficult thing for these platforms on a long-term basis," said Jon Avnet, the co-CEO of Indigenous Media who previously produced films including "Black Swan" and directed "Fried Green Tomatoes" and "Risky Business." "Studios have to make a lot of money on hits not because of prestige but because money pays for the failures."

Indigenous Media's series "Blue" started on the WIGS channel on YouTube, but has distribution deals with Hulu, and the WIGS' website. It's distributed traditionally in the UK and soon will announce another international deal on a traditional cable platform. Avnet points out that while WIGS has won a lot of awards, it's harder for the series to be "rewarding financially" just relying on digital revenue.

Still, he pointed out that times are changing. As digital platforms mature, they'll be viewed on the same ground as traditional distribution means. Apple entering the game means that digital is being taken more seriously.

Apple has made previous inroads in the Hollywood community, including former CEO Steve Jobs backing animation studio Pixar, and creating a viable digital revenue stream through iTunes. It also has the hardware, which can provide invaluable data to help create future exclusive programming, and give information to brands for their advertising campaigns.

"Apple, they're very good at what they do," Avent said. "They are going to come up with a smart plan."