I’ll qualify this musing by admitting I’m more than a tad biased towards the good folk at Apple TV+. I worked with many of them for years and I have immense respect for their taste and talents. And if one were to look at the data from the smart TV in my living room you’d believe my money was being put where my mouth is–though you’d be missing the fact that’s it’s my binge-happy roommate’s almost non-stop consumption of several of the service’s (and, yes, my) recommends after he, like many, got hooked on SEVERANCE that’s driving those outsized results.
And relative to its competition, with a decidely smaller slate of original content, the gang at the now five and half-year old service has a pretty darn good batting average when it comes to winning awards. At last year’s Emmy Awards alone they snagged 10 of those statuettes and, of course, top honors at the 2022 Oscars for the inspiring CODA. Netflix and MAX have their share of those trophies as well, but with far more cracks at the –well, apple.
But all of that comes with a cost, and a recap of exactly what those costs have been that was dropped by THE INFORMATION early yesterday has been received by numerous analysts and pundits with as an apolcalyptic read as any of the events that have transpired at Lumon Industries of late. THE VERGE’s Emma Roth was among the many who pounced on the work that her competition broke with dramatic recaps for the paywall-resistant like moi:
Apple TV Plus is losing more than $1 billion every year despite reaching 45 million subscribers in 2024, according to a report from The Information. It’s reportedly the only Apple subscription that isn’t generating a profit.
As part of an effort to take “a harder line on spending,” Apple cut its initial $5 billion budget for Apple TV Plus content by around $500 million, The Information reports. Even with hit original shows like Severance, Apple TV currently captures less than 1 percent of total monthly streaming services viewership, as opposed to Netflix’s 8.2 percent, according to data from Nielsen cited by The Information.
This dour news came out mere days after some of Apple’s more camera-shy executives schlepped to Austin’s SXSW and publically put some of their own spin on those numbers, as DEADLINE’s Jill Goldsmith recapped in her report:
Apple TV+ has made slow but steady progress since launching in 2019 with hits from The Morning Show to Ted Lasso, Shrinking and Severance. The latter series, executive produced and directed by Ben Stiller, grew the streaming service by 2 million subscribers in February, as per research and measurement firm Antenna. Stiller and Eddy Cue, SVP of Apple Services, took the stage at SXSW earlier this month to talk about the the genesis of Severance, the streamer’s top performing show ever.
And as we are frequently reminding fans of these musings that insight into Apple’s popularity–inferred by the fact that its logo didn’t make the graphic for the just-released February 2025 GAUGE–is perhaps a bit misinformed, given the fact that it STILL only measures connected screen viewing. And when you’re a service that’s being run by folks whose main goal in life is to sell you devices that serve as alternatives to such, there’s no telling how many more views they’ve gotten on them. Unless, of course, you happen to be an Apple TV+ employee, and the fact that they are still exceptionally hesitant to share specifics in the same FOFO manner as their less successful competitors is somewhat telling. One competitor in particular couldn’t help but take notice as Roth chose to share:
But, as noted by The Information, Apple TV Plus was largely created to keep people in the Apple ecosystem. Netflix co-CEO Ted Sarandos touched on the strategy behind Apple TV Plus during an interview with Variety this week, saying “I don’t understand it beyond a marketing play, but they’re really smart people. Maybe they see something we don’t,” he said.
But as Goldsmith added, they’re making it quite hard for other smart people to figure out exactly what is or isn’t going on because of the way they–ahem–Cook their books:
Apple CEO Tim Cook, on quarterly conference calls with analysts, routinely tips his hat to Apple TV+ shows and awards they win. But the company doesn’t break out any data on the streamer, which is buried in the Services division — one of the company’s fastest growing — along with myriad other subscription platforms like Apple Music, Apple Arcade, Apple Fitness, Apple News+, Apple Books as well as the Apple App Store, iCloud, Apple Care, Apple Pay and more. The segment had revenue of $96 billion for FY 2024 that ended in September.
But THE INFORMATION did its best to go on a deeper dive into putting those numbers in context, as Roth counterpointed:
Sources also told The Information that Apple Music, which reportedly reached 100 million users on subscriptions and free trials last year, has seen a slowdown in growth.
Apple News Plus, Fitness Plus, and Apple Arcade also “struggle with low usage and profits,” while sales of digital books have taken a dip as well, The Information reports. Sources tell the outlet that if these services weren’t included in the company’s Apple One bundle, which people mostly buy for iCloud Plus, they “likely wouldn’t be profitable.” Apple reportedly laid off around 100 people in its News and Books division last year.
And ARS TECHNICA’s Scharon Harding piled on with substantially more dirt:
Per one of the sources, Apple TV+ has typically spent over $5 billion annually on content since 2019, when Apple TV+ debuted. Last year, though, Apple CEO Tim Cook reportedly cut the budget by about $500 million. The reported numbers are similar to a July report from Bloomberg that claimed that Apple had spent over $20 billion on Apple TV+’s library. For comparison, Netflix has 301.63 million subscribers and expects to spend $18 billion on content in 2025.
Cook started paying closer attention to Apple TV+’s spending after the 2022 Oscars, where the Apple TV+ original CODA won Best Picture. Per The Information, spending related to Apple TV+ previously included lavish perks for actors and producers. Apple paid “hundreds of thousands of dollars per flight” to transport Apple TV+ actors and producers to promotional events, The Information said, noting that such spending “is common in Hollywood” but “more unusual at Apple.” Apple’s finance department reportedly pushed Apple TV+ executives to find better flight deals sometime around 2023. In 2024, Cook questioned big-budget Apple TV+ films, like the $200 million Argylle, which he said failed to generate impressive subscriber boosts or viewership, per an anonymous “former Apple TV+ employee.”
But perhaps GURU FOCUS’ summed up the numbers that mean the most of all to Cook:
Apple TV+ is part of the tech giant’s Services division, which achieved a record $26.34 billion in revenue last quarter, up from $23.11 billion in the same period last year. It is important to note that Apple stock has shed 14% of its value YTD, and around 5.7% over the past six months. The past month has been especially tough where the stock lost more than 12% of its value.
And it’s not like Cook is making it easy for his executives to reach for the lowest-hanging fruit of how to drive viewership and engagement by firmly maintaining that Apple TV+ content be family-friendly first and foremost. You’re not likely to see the level of sex in GAME OF THRONES or BRIDGERTON on this platform, let alone the kind of explicit content that likely exists in the browsers and YouTube apps of the devices of an awful lot of those devices that Apple is still selling pretty well. And yes, even YouTube is being undercounted by Nielsen’s outdated methodology.
And Apple TV+ is further handicapped by its lack of a signficant library to drive the number of hours and engagement that propel the likes of NETFLIX to the levels that Nielsen does measure. Fanboy Corey Atad gushed late last month on POCKETLINT.com how the highly selective segment of consumers–which likely includes my roomie–how they see that a positive:
Netflix, the leader of the pack, often drops as many as a dozen new shows and movies each week, while other paid and free streamers like Disney+, Max, and Tubi rely on both a bevy of new content, and large libraries of catalog titles. Among the streamers, though, there is one big outlier: Apple TV+. The streamer, which drops episodes of its shows weekly, tends to have only three or four shows running simultaneously. This has meant a steady pace of new content, but nothing overwhelming. In the six years since its launch, Apple TV+ has amassed a library of just over 130 titles across all its original movies and TV shows. A far cry from the thousands of original and catalog titles available on other streaming services.
But in a world where, apparently more than ever if only by necessity, fast food is in far greater demand that gourmet fare, that is being seen more and more as a liability.
Do note that despite the hue and cry over these results–even the recent Wall Street decline–Apple still as of this morning has a market cap of $3.233 TRILLION USD, making it, per COMPANIES MARKET CAP, the world’s most valuable company by market cap.
And do remember this daunting site of a certain family-friendly media company’s CEO taking to the stage at Apple’s 2023 WWDC conference to tout all of the possibilities of how live ESPN content could potentially help sell a whole bunch of those VR headsets Apple still hopes to populate the 1 per cent club with to gain traction and lay the groundwork for price drops and deals that would make them more competitive with similar headgear from Meta. Ya know, the strategy they’ve used with the I Pod and the I Phone.
FWIW, THE ANKLER’s curmedgeonly but often spot-on Richard Rushfield has already declared where he thinks this all may wind up in the newsletter he authored yesterday (and yes, I’m in that camp, too):
(W)here does this lead? What is a company to do which needs to put a bigger shining halo on its aging product business and looks to Hollywood for help with that? Particularly when that company has hundreds of billions of dollars on hand and suddenly a regulatory climate that looks far more open to expansion than it did a few months ago?
At the same moment when a certain entertainment conglomerate — perhaps the only other consumer brand with as broad and pristine a public profile as Apple — is going through its own transition crisis? And its CEO badly needs a big, exciting ending to his heroic tale?
(E)very piece of news leads me to put more chips on this. For Apple, there’s one clear solution that it can pay for with cash on hand. And that solution is spelled M-I-C, see you real soon, K-E-Y . . . why, because it makes too much sense.
I’ll finish it for you, fellow Luddite. M-O-U-S-E.
You know, like what one uses to navigate an I Mac?
Until next time…