Apple's streaming service continues to bleed money as the tech giant pursues its content ambitions in the highly competitive streaming market. Despite critical acclaim and a growing library of original content, the financial picture remains challenging for the iPhone maker's entertainment division.
The Billion-Dollar Loss
Apple is reportedly losing more than USD 1 billion annually on its Apple TV+ streaming service, according to sources cited by The Information. The tech giant spends approximately USD 4.5 billion each year on original content production, while the service has only managed to attract around 45 million subscribers since its 2019 launch. This relatively modest subscriber count—compared to Netflix's 300 million—highlights the expensive reality of competing in today's streaming wars.
A Drop in Apple's Ocean
While the losses might seem substantial, they represent mere pocket change for Apple, which generated USD 391 billion in revenue last fiscal year with net profits of USD 93.7 billion. The company's services division, which includes Apple TV+ alongside offerings like Apple Music and the App Store, brought in USD 26.3 billion in Q4 2024 alone, marking a 14% year-over-year increase. This financial cushion gives Apple a significant advantage over traditional media companies that cannot sustain similar losses indefinitely.
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| Apple's streaming service struggles amidst impressive overall corporate earnings |
Quality Over Quantity Strategy
Unlike competitors such as Disney+ and Warner Bros. Discovery's MAX, Apple TV+ has pursued a unique strategy focusing almost exclusively on original content rather than licensing existing shows and movies. This approach has yielded critical success, including a Best Picture Oscar for CODA in 2022 and acclaimed series like Ted Lasso, The Morning Show, and most recently Severance, which has reportedly surpassed Ted Lasso as the platform's most-watched series.
Beyond Subscriber Numbers
Apple's streaming strategy appears less focused on raw subscriber counts and more on strengthening customer loyalty to its broader ecosystem. The service frequently comes bundled with new device purchases through extended free trial periods, and partnerships with carriers like T-Mobile include Apple TV+ as a perk on certain unlimited plans. Additionally, bundle deals like Comcast's StreamSaver package Apple TV+ with Netflix and Peacock for USD 15 monthly, suggesting Apple is prioritizing distribution over maximizing direct subscription revenue.
The Future of Apple's Streaming Ambitions
CEO Tim Cook has reportedly taken a keener interest in the platform's spending and strategic importance following its Oscar win. The service has also expanded into live sports, becoming the exclusive home of Friday Night Baseball. With Apple's massive financial resources—generating nearly USD 100 billion in annual profits primarily from iPhone sales—the company can afford to play the long game in streaming while competitors face increasing pressure to achieve profitability.
Industry Consolidation Possibilities
As streaming competition intensifies and consumers increasingly seek bundled offerings to combat subscription fatigue, industry analysts have speculated about potential consolidation. Disney, facing challenges from declining box office performance and streaming costs, has been mentioned as a potential acquisition target for Apple, which could benefit from Disney's content library and franchises. Current trends suggest viewers are increasingly seeking super bundles that provide access to multiple content libraries at discounted rates rather than paying full price for individual services.