Apple TV+ Annual Losses Reportedly Exceed A Billion Dollars
The service is losing more than $1 billion annually even though its subscriptions grew to around 45 million last year, those people said. Neither figure has been reported previously. One of the people said Apple has spent more than $5 billion a year on content since launching Apple TV+ in 2019, but the company trimmed that budget by around $500 million last year as Cook and other executives took a harder line on spending.
If it was a standalone company, the business model of Apple TV+ would fail. It is incredibly capital intensive, inducing years of losses before any glimmers of profitability. But Apple TV+ is not a standalone company. The conglomerate of Apple can easily absorb a billion dollar loss, as long as the executive team has the appetite for it. For at least as long as Cook and Cue remain at Apple, I have no concerns about the division being shut down.
It may be starting from a small base, but TV+ does have upward trajectory. Frankly, on most metrics aside from the bottom line, the Apple TV+ plan is working. Apple is making a lot of good shows that people like, and is garnering millions of subscribers with ever-increasing viewership (given the increasing frequency of appearances of Apple shows on the Nielsen streaming charts). Over time, I see Apple TV+ as a big asset of the Apple One bundle. Customers may sign up because they need more iCloud space, or already have Apple Music, but TV+ helps add value that keeps those customers subscribed long-term. If you get hooked on an Apple Original series every couple of months, it is suddenly a lot harder for someone to cancel Apple One and downgrade to paying for iCloud alone.
Alongside reducing churn, the ongoing brand prestige and self-aggrandising awards recognition is also an added bonus for the company. If it really has accrued 45 million subscribers to date with a catalog of just ~280 originals, it doesn’t seem too far-fetched that they could eventually break even on the effort. Just repeat the formula; keep releasing flashy new and exclusive titles, and in turn slowly gain more subscribers.
All the while, assuming they are interested in ways to accelerate that growth plan, I expect Cue is always keeping his door open to a big back-catalogue acquisition deal, if a suitably competitive value-for-money proposition ever comes about. But he’s clearly not in a rush.