Apple jealously guards the audience figures for its Apple TV+ service, except when it comes to congratulating itself on the success of a particular program without providing any concrete figures. Behind the scenes, however, there are concerns about the platform's less than mediocre results. According to indiscretions from the media The Information, Apple TV+ is posting losses of $1 billion per year, even though the number of subscriptions will have reached 45 million in 2024. A far cry from the more than 300 million of the champion Netflix.
Apple TV+: the losses behind the glitter
Apple has reportedly spent $5 billion on content purchases each year since 2019, but the company scaled back last year by cutting the budget by $500 million and adopting a more flexible strategy to make a little money.
From a critical perspective, Apple TV+ has a string of highs—such as the series Severance and the Oscar for Best Picture for CODA in 2022—and lows, such as the film Argylle for which Apple paid $200 million. Tim Cook himself reportedly lamented the lack of return on investment for Matthew Vaughn's blockbuster... and he's reportedly keeping a close eye on this division's spending. Apple's accountants reportedly cut the budget for private jets that transport stars from one place to another to promote their films and series!
But statuettes and honors are no substitute for audiences and subscribers. According to Nielsen, Apple TV+ represents less than 1% of total viewing time for streaming services on connected TVs in the United States each month. Netflix is far ahead with 8.2%, Prime Video is at 3.5%. A difference that can be explained by the particularity of Apple TV+, which only offers exclusives, without a deep catalog like its rivals.
Apple nevertheless knows that this streaming business requires patience and heavy investments before eventually reaching profitability. The manufacturer's business plan thus announces losses of between 15 and 20 billion dollars (!) during the first 10 years of the service. Ted Sarandos, co-CEO of Netflix, wondered this week in an interview with Variety what Apple had come to do in this mess: "I don't understand it other than as a marketing ploy, but they are very intelligent people. Maybe they see something we don't."
Apple TV+ fits into a services branch that allows the Apple company to post excellent results each quarter. It has become the second largest revenue source after the iPhone, whose sales have been stagnating for some time. But the revenue from this activity is not generated by the services launched since 2019: Apple TV+ is losing money, while Apple Arcade, Fitness+, and News+ are barely profitable. Above all, they are relatively underused.
Apple Music reportedly crossed the 100 million subscriber threshold last year, still far behind leader Spotify (263 million paying subscribers). Margins are very thin for the music service, which pays record labels and artists more than 70% of its revenue.
Ultimately, it's the "traditional" services that are making the most money: Apple Care and additional iCloud+ storage (which also explains why Apple has never increased the free 5GB allowance for iCloud...). Apple can still count on the $20 billion check signed by Google to be the default search engine for Safari, but this monumental sum is threatened by the American justice system.
Source: The Information
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