Streaming is hard, and for most companies that aren’t Netflix, launching your own SVOD streaming service is a difficult way of earning a profit. So it should be no surprise that Apple TV+ isn’t among the profitable streamers either.
A report in The Information on Thursday said that Apple TV+ loses $1 billion on streaming annually, and it’s doing that despite 45 million subscribers. Those are two numbers that, despite launching in 2019, have never been released publicly by Apple. That’s because Apple TV+ is housed within Apple Services, a division of Apple that also includes Apple Music, Apple Fitness, Apple News+, Apple Arcade, Apple Books, and iCloud.
Per the company’s most recent earnings, the three months ending in January saw Apple bring in $124.3 billion in revenue, $26.3 billion of which came from Services, a record for the division. That’s just for one quarter. For the year, Services brought in more than $96 billion. It can afford to absorb a billion dollars in losses.
Apple also doesn’t report how many subscribers Apple TV+ has specifically, but 45 million would mean it’s got more subs than Peacock and fewer than Paramount+, but several studies have suggested that Apple TV+ on the whole accounts for less than 1 percent of all total streaming viewing. Shows like “Ted Lasso” and “Severance” are popular enough that they still pop on Nielsen lists of the most popular streaming series, but overall Apple still lags well behind the likes of Netflix or Amazon in terms of the share of eyeballs.
It’s been common knowledge for a while that Apple TV+ is something of a loss leader for Apple. The company would rather be able to offer the perk of getting a free trial of the service when you buy a new iPhone and being able to say it’s the home to “Severance” and the Best Picture winner “CODA” than it is in turning a hard profit or depending on it for the bottom line. Apple TV+ is also bundled into all the other services via Apple One, so it’s unclear how many people are subscribing to get cloud storage and music streaming and deciding they may as well tack on Apple TV+, versus subscribing solely because they want to watch “The Gorge.”
But that doesn’t mean it’s been spending profusely. After “Argylle” turned out to be a mega box office bomb, followed by “Fly Me to the Moon,” Apple scaled back its theatrical ambitions and trimmed the amount it was spending. It has “F1” coming out in partnership with Warner Bros. this summer, but it also pulled back on the wide release plan for last year’s “Wolfs” starring Brad Pitt and George Clooney. The Information report says in recent years Apple’s content spend was around $5 billion annually, but that it recently trimmed that amount by half a billion to $4.5 billion.
One way Apple could stem the losses is by introducing ads to the service, offering another cheaper tier that’s ad-supported to potentially draw in more customers. It’s the last major streamer that’s been reluctant to do so. Apple did bite the bullet and make Apple TV+ available via its biggest competitor as an app through Android devices, so it has growth on its mind.
A rep for Apple did not reply to IndieWire’s request for comment.
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