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Apple explores move into original programing business: Variety

Customers stand beneath an Apple logo at the Apple store in Grand Central station in New York City, July 21, 2015. REUTERS/Mike Segar

(Reuters) - Apple Inc is looking to move into the original programing business to compete with video streaming companies such as Netflix Inc, Variety reported on Monday.

Apple, which aims to begin offering the service next year, has held preliminary talks with executives from Hollywood in recent weeks to gauge their interest in producing entertainment content, Variety reported, citing sources. (http://bit.ly/1Q4MW59)

Apple spokesman Tom Neumayr declined to comment.

Such a move could mean increased competition for Netflix and Amazon.com Inc's Prime Video streaming service.

Netflix shares fell more than 8 percent to $105.74 on Tuesday. Amazon shares declined 2.2 percent to $501.64, while Apple shares fell 2.4 percent to $111.05 amid a sharp fall in the broader market.

Netflix has won over viewers with its award-winning original programs such as "House of Cards" and "Orange is the New Black. Amazon has built up credibility, most notably with its television series "Transparent," which won two Golden Globes earlier this year.

Streaming services are becoming increasingly popular especially with younger viewers who often binge watch TV shows and do not want to pay for costly cable TV bundles.

This has hit traditional media companies such as Viacom Inc, Walt Disney and Twenty-First Century Fox Inc, which posted disappointing numbers this earnings season.

Apple's goal is to create development and production divisions that would churn out long-form content for online streaming, Variety said, quoting a "high-level executive" at the company.

Cupertino, California-based Apple is looking to start hiring for the planned division in the coming months, Variety said, adding that it was not clear whether the focus would be on TV series, movies or both.

"..I don't think Apple can produce enough original content to launch a standalone service in at least 10 years or may be 20," Wedbush Securities analyst Michael Pachter said.

Pachter, however, said Apple's large cash reserves would make Netflix investors nervous, because the tech giant could easily match Netflix's spending.

Apple had $202.85 billion in cash, cash equivalents and marketable securities as of June 27.

Bloomberg reported last month that Apple would delay its live TV service to at least next year. It had planned to introduce the service, delivered over the Internet, this year.

(Reporting by Kshitiz Goliya, Lehar Maan and Anya George Tharakan in Bengaluru; Editing by Sayantani Ghosh)