Apple’s streaming service, Apple TV+, is reportedly losing more than $1 billion annually, according to The Information on Thursday.
The revelation provides a rare look into the financial struggles of Apple’s content business, which the company has historically kept under wraps. Although Apple refused to disclose Apple TV+ performance metrics in its quarterly earnings calls, the streaming service has long been rumored to be operating at a loss, overshadowed by more dominant competitors.
The report also sheds light on Apple TV+’s subscriber count, revealing that the service had 45 million subscribers in 2023—a figure that places it between NBCUniversal’s Peacock (36 million) and Disney’s Hulu (53 million). While these numbers indicate moderate success, Apple TV+ still trails far behind streaming giants like Netflix (260 million subscribers) and Disney+ (152 million subscribers).
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Competition’s Role in Apple TV+’s Financial Struggles
Apple’s struggle in the streaming market is widely believed to have been compounded by competition, as dominant players continue to expand their market share, leaving Apple TV+ in a precarious position. Netflix and Disney+ remain the undisputed leaders in the industry, leveraging vast libraries of existing content and aggressive spending on new productions.
Apple TV+, in contrast, has pursued a quality-over-quantity strategy, focusing on big-budget, critically acclaimed originals like Ted Lasso, Severance, and Killers of the Flower Moon. However, this approach has struggled to translate into mass-market appeal. Unlike Netflix and Disney+, which have extensive catalogs of licensed and original content spanning decades, Apple TV+ started from scratch in 2019, leaving it with a relatively limited library.
Adding to Apple’s woes, streaming heavyweights have taken aggressive steps to secure their market dominance. Netflix, for instance, cracked down on password sharing, forcing users to either subscribe or lose access, a move that led to a surge in new paying subscribers. Meanwhile, Disney has leveraged its vast intellectual property, rolling out major franchises like Marvel, Star Wars, and Pixar films exclusively on Disney+, ensuring that its platform remains indispensable to fans.
Can Apple Sustain the Losses?
While losing $1 billion annually is an alarming figure, Apple has the financial muscle to withstand these losses if it chooses. The company maintains a net cash position of $57 billion, meaning it has the ability to fund Apple TV+ for years without significantly impacting its overall business.
For Apple, streaming is less about immediate profitability and more about strengthening its ecosystem. Apple TV+ is often bundled with other services, such as Apple Music and iCloud, as part of the Apple One subscription package, encouraging users to remain within Apple’s ecosystem. This strategy ensures that even if Apple TV+ itself isn’t making money, it contributes to Apple’s broader revenue streams by increasing customer retention.
Legal and Financial Hurdles Looming Over the Industry
The broader streaming industry has entered a period of financial scrutiny, with many companies scaling back on content spending after years of rapid expansion. Hollywood’s major studios, including Warner Bros. Discovery and Disney, have begun cutting costs and prioritizing profitability over growth.
At the same time, regulatory scrutiny over Apple’s dominance in digital services is mounting, with the U.S. government and European regulators investigating the company’s App Store policies. If forced to loosen its grip over in-app payments, Apple could lose a key advantage in promoting Apple TV+ subscriptions through its ecosystem.
However, analysts believe that Apple is unlikely to abandon Apple TV+, but the company may need to rethink its approach to remain competitive. Reports suggest Apple is exploring more partnerships, including potentially bundling Apple TV+ with other streaming services or striking deals for live sports content.
The Cupertino giant has already secured Major League Soccer rights and is in talks for expanding its sports offerings, seeing live events as a way to drive long-term engagement. Additionally, the company is rumored to be considering acquiring a major content library, which would help Apple TV+ compete with Netflix and Disney+ on content volume.
Apple’s stock has remained resilient. Shares rose 0.75% on Thursday to $216.78, and Apple continues to hold its title as the most valuable company in the world, with a market cap of $3.26 trillion.
However, the question remains: Can Apple TV+ carve out a sustainable niche in an increasingly cutthroat industry, or will it be forced to rethink its long-term streaming ambitions?