Apple Losing Over $1 Billion A Year On Streaming – Report

[BluBonnet]

Apple Losing Over $1 Billion A Year On Streaming – Report

Apple is losing more than $1 billion a year on streamer Apple TV+, according to a report in the Information that cited two people familiar with the matter.

The tech giant has spent over $5 billion a year on content since launching Apple TV+ in 2019 but trimmed that by about $500 million last year, the report said.

Traditional media companies have also lost billions to launch and feed their streaming platforms over the past five years. They have been working to stanch the red ink, with some recently posting profits. Apple, which saw $391 billion in annual revenue for its fiscal 2024, is better able to absorb losses.

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.

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.

Apple didn’t immediately respond to a request for comment.

[Rayjaymay]

So how much could they realistically make if they sold the physical media rights to Killers of the Flower Moon or CODA?

[Guydowood]

perhaps if they embrace physical media, some of their content would most likely make a profit.....

[bhampton]

Kind of glad I don’t have a billion to lose that must suck.

[BluBonnet]

Originally Posted by Rayjaymay

So how much could they realistically make if they sold the physical media rights to Killers of the Flower Moon or CODA?

Originally Posted by Guydowood

perhaps if they embrace physical media, some of their content would most likely make a profit.....

As the story points out,

Apple, which saw $391 billion in annual revenue for its fiscal 2024, is better able to absorb losses.

They have nearly $400 billion in annual revenue. Losing a billion on streaming is a minimal loss.

If you have almost 400 dollars in your wallet and you lose $1, well, you're probably not going to be too concerned...

[Guydowood]

Originally Posted by BluBonnet

As the story points out,



They have nearly $400 billion in annual revenue. Losing a billion on streaming is a minimal loss.

If you have almost 400 dollars in your wallet and you lose $1, well, you're probably not going to be too concerned...

I wish I had $400 billion. that's a shit load of 4KS!

[Diesel]

Revenue is not the same as profit…

And even net income does not account debt obligations and dividends.

[R3P0]

Apple is allowed to legally claim a loss for 5 years when a new service is launched to avoid paying taxes. Service launched in 2019 so 2020 taxes it would show on. so this would be the 4th or 5th year they can claim a loss

[BluBonnet]

Originally Posted by Diesel

Revenue is not the same as profit…

And even net income does not account debt obligations and dividends.

I haven’t claimed otherwise about any of those things, so I feel like that’s kind of beside the point.

I thought it would help to keep things somewhat simple, but if a longer explanation is what folks want, I’m happy to oblige!

Here’s a brief explanation from a recent article:

Apple TV+ being Apple’s only service not turning a profit isn't good, but it’s also expected. Like other streaming services, Apple TV+ wasn't expected to be profitable until years after its launch. An Apple TV+ employee that The Information said reviewed the streaming service’s business plan said Apple TV+ is expected to lose $15 billion to $20 billion during its first 10 years.

For comparison, Disney’s direct-to-consumer streaming business had operating losses of $11.4 billion between the launch of Disney+ in fall 2020 and April 2024. Disney’s streaming business became profitable for the first time in its fiscal quarter ending on June 29, 2024.

Apple is also worth nearly $4 trillion and made $93.7 billion in net income during its most recent fiscal year. That makes $1 billion in annual streaming losses manageable.

Still, streaming is a huge opportunity for Apple, and even streaming newcomers that have struggled in the past are finding ways to turn profits lately. Of course, many of Apple TV+'s rivals are making ends meet with ads and price hikes. Apple TV+ doesn't have ads and hasn't increased prices since the fall of 2023 (which is a long time for a streaming service these days).

Still, Apple TV+ is challenged to find a way to stand out in an increasingly competitive streaming market that includes rivals with much bigger libraries that are shifting toward mass, mainstream appeal.

Today, The Information reiterated previously made claims that the initial idea behind Apple TV+ wasn’t about having the most streaming subscribers but about making people more attached to the iPhone and Apple ecosystem.
+

There’s also this:



So, I think it’s clear that Apple can well afford to lose $15 to $20 billion or so over 10 years, to build up their streaming service until it becomes profitable on its own.

[Telemachus]

It's okay they make that money back easily with their memory upgrade prices