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Apple's services business is set to grow by 20 percent next year, boosted by its forthcoming Apple TV+ streaming service, according to the latest predictions by Morgan Stanley analyst Katy Huberty (via CNBC).

apple-tv-plus-promo-image.jpg

In a new investor note, Huberty predicts that Apple TV+ will grow into a $9 billion business by 2025, despite increasing competition in the streaming market and even if only 1 in every 10 Apple user subscribes to the service:
"With an attractive price point at $4.99/month, and wide initial distribution to the Apple installed base via the bundled free year offer, we estimate Apple TV+ can become a $9B revenue business with 136M paid subscribers by FY25, assuming just 1 in every 10 Apple user pays for the Service by FY25."
Huberty also notes that for Apple TV+ to have a more material impact on its near term estimates, Morgan Stanley would have to assume: "1) Apple TV+ production costs are significantly higher at the launch of the Service, and/or 2) more users redeem the Apple 12 month free offer with the purchase of a device."

Launching on November 1, Apple TV+ costs $4.99 per month and will be available on the Apple TV app on iPhone, iPad, Apple TV, iPod touch, Mac and other platforms, including online via www.tv.apple.com. Customers who purchase any new iPhone, iPad, Apple TV, Mac or iPod touch starting September 10, 2019, are eligible for one year of Apple TV+ for free.

Morgan Stanley also raised its target price for Apple stock from $247 to $289. That works out as a 17 percent increase based on its outlook for Apple TV+, as well as its prediction that sales will return "to growth as replacement cycles peak" in 2020 as users upgrade to Apple's 5G-enabled iPhones.


Article Link: Morgan Stanley Predicts Apple TV+ Could Be a $9 Billion Business by 2025
 
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mozumder

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Do we have reviews of their shows yet? My worry is that they're missing out on edgier indie filmmakers that sets the state-of-the-art, in favor of more established filmmakers that may be beyond their prime.

See Fleabag or Pen15 for what I mean.
 
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Saipher

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So basically nothing given that Apple sells it's default search engine option to Google for about the same amount

Actually, that figure is more like $12 billion in 2019 (Google payed Apple), but still, $9 billion is a lot of money and not bad for a streaming service that’s just starting in such a competitive market.
 
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cardfan

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It's flat out implausible unless Apple were to increase it's investment by an order of magnitude, which is the sort of thing you'd expect a Morgan Stanley analyst to care about tbh.

She is pretty quiet on annual costs of new content or Apple possibly raising the price not to mention new competition. Regardless it’s a bit pie in the sky ramblings about what if by 2025 for this to factor into anything right now.

I’m not sure where she pulls this “if just one out of 10 subscribe” from. It simply doesn’t work that way.
 
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mdriftmeyer

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Now I'm no analyst but 136 million users seems incredibly ambitious given the competitive landscape. Apple Music got to 60 million in 4 years, so more than double this in 5/6 seems a stretch quite frankly

So Apple got to $7.2 Billion in streaming music revenue in 4 years and well past that now, but you don't think they'll get to $9 billion in streaming video revenue in five years? They'll get more.
 
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waquzy

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Now I'm no analyst but 136 million users seems incredibly ambitious given the competitive landscape. Apple Music got to 60 million in 4 years, so more than double this in 5/6 seems a stretch quite frankly

Not really, the Apple Music subscription costs £9.99 a month, whereas the Apple TV+ subscription is half the price(£4.99)
 
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cardfan

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Here’s what the same writer said in September:

On a stand-alone basis, we forecast that an Apple Video streaming service with high quality but limited breadth could be priced at the low end vs. competitors, or $7.99/month, and reach over 50M paid subscribers by 2025

Anyways it’s not worthwhile to take her seriously. I’d be more excited about new products for Apple and feeling more reassured that 2020 iphone sales may return to growth.
 
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johnyslats

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So Apple got to $7.2 Billion in streaming music revenue in 4 years and well past that now, but you don't think they'll get to $9 billion in streaming video revenue in five years? They'll get more.
Apple Music has VERY different costs around the world, so it's too simplistic to say every one of the 60m is paying $10 a month
Not really, the Apple Music subscription costs £9.99 a month, whereas the Apple TV+ subscription is half the price(£4.99)
That's true, but I think these are very different beasts. For £9.99 you can pretty much get any music you want, whereas the Apple TV offering will pale in comparison to Netflix/Disney for some time
 
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Abazigal

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Now I'm no analyst but 136 million users seems incredibly ambitious given the competitive landscape. Apple Music got to 60 million in 4 years, so more than double this in 5/6 seems a stretch quite frankly

I am not sure if the two are directly comparable. Apple Music directly competes with streaming music services such as Spotify, in that there is little benefit in subscribing to both.

Conversely, there is room for the consumer to be subscribed to multiple streaming services. Having Netflix won’t stop him from also getting TV+ or Disney+, assuming he finds value in the content offered.
 
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PickUrPoison

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Now I'm no analyst but 136 million users seems incredibly ambitious given the competitive landscape. Apple Music got to 60 million in 4 years, so more than double this in 5/6 seems a stretch quite frankly
Hard to say. They may have 50 million (unpaid) by the end of the year. It all depends on how successful they are at converting free users to paid.

If they give 75-100 million users a free year for each of the next six years, that’s a lot of potential customers that have been exposed to the service. But how many will convert to paying subscribers? How many will subscribe without having a free one year trial? What is the churn? Part-timers (regular cancel/re-subscribers)? Installed base growth rate?

There are a lot of unknowns to plug into a model of subscriber lifetime value; with reasonable inputs I think you could easily come up with anything from 50 million to 150 million (paid) for 2025. Especially pre-launch, there’s a lot of guesswork going into that spreadsheet jockeying.
 
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jamdex

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Jul 8, 2012
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What's this got to do with MAC rumors?

This entertainment stuff gets on my nerves. I have not the slightest interest in it; I come to MacRumours to get info about forthcoming Mac-related items. Obviously this includes the phone/pad. But this constant repeating of Apple's press releases about their latest boring show lineup is just, well, boring.

Please get back to your core purpose MacRumours.
This.

Every other post on the main page seems to be TV related.
 
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