Morgan Stanley Predicts Apple TV+ Could Be a $9 Billion Business by 2025

[darcyf]

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.

Apple aren’t into releasing experimental tech. Same philosophy with tv it seems. But it’s early days for the service. And I’m sure Phoebe Wallace Bridger is on their radar now that she’s proven. All in keeping with the tried and tested Apple playbook.

 

[cardfan]

So like very device or service introduced by Apple the tech blog crowd passes judgement and declares there’s no way for it to succeed... until it does.

Except that’s not true at all.

Let’s keep in mind that services mean many different things at Apple. AppleCare probably leads the way. Not many here would say AppleCare is doomed to fail.

How about selling default search to google for billions? Good service. App Store revenue? I don’t think people were saying App Store is doomed. Apple Music? Not doomed but probably a bit disappointing for Apple. Credit card was pretty innovative.

But here we are with something Apple has little control over making. The costs are outrageous. These tv shows are a dime a dozen. Any of these shows could be on Netflix and you’d skip right over them as usual.

At least arcade has lower costs for Apple plus an advantage. No ads, no in app purchases, works on all apple devices. That is appealing. What does atv offer over the competition? Nothing. They’re the same shows anyone can and do make by Hollywood.

The only thing Apple can do is bake it in their atv app and market them relentlessly as if these dime a dozen shows are somehow more worthwhile than the others.

It’s a race for content. Netflix already shows it’s a cash losing game. Netflix is a cash burning machine. It’s income statement is laughable. They’ll have to find new debt next year just to pay what’s due. It’s a nice game that’ll probably end in default when they can’t grow subscribers and find suckers to fund new debt.

Others will say Apple has the money though to feed this cash burner. But it’s still a loser. Apple doesn’t like losers.

 

[ShadowJade]

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

While is basically agree with your post, $5/month versus $10, (in my case $15 for family), is a huge difference. I just paid $75 for 4 tickets to Star Wars...for my family to enjoy 2 hours together. One season pass of your favorite show is $30-40. If people like a certain show or 2 in the free trial, there is little to believe that $60/year will deter them from continuing. If they go a month or 2 with no new content introduced, that could be a problem. But, I often think there is too much on other services. It will be nice to try each of 9-10 shows, and sample new ones as they premiere. Do I think it will hit 139 million paid, probably not. Keeping that 136 billion for 12 months to hit 9.7 billion is another story. But even if it is 1/2 that number...is that a failure for Apple?

 

[rmoliv]

I can't stand The Morning Show anymore and it hasn't been released yet. Anyway, this week has been quite tedious so far, no major rumors, no product(s) launching. People with too much time on their hands imagined an event and product releases that will never happen (the Apple “tags” - I honestly don’t see Apple releasing such a thing under its own brand) or will be released only next year (the rumored new 16-inch MacBook Pro and AirPods Pro).

 

[PastaPrimav]

Well lets see how many hardware sales a year? 170 million iPhones, 40 million iPads, 20 million Macs? And Apple is fraudulently claiming $60 of Apple TV+ revenue for each hardware sale on the books. So 230 million hardware sales x $60 = $13.8 billion.

It is already a 13 billion dollar business without anyone ever caring or subscribing. Pretty amazing what you can do with some shady accounting.

 

[Justanotherfanboy]

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

Really?
I only know one single person that pays for Pandora Plus, everyone else I know (including myself) only use free music tiers.
However, almost everyone I know subscribes to one or more streaming video services (I do Amazon, Netflix, HBO, DC, & Disney+).
Double the amount of video streaming customers in 5/6 the amount of time as music streaming customers growing to where they are now seems to bear out, using my (admittedly, non-analyst) thought process.

 

[ShadowJade]

Anyone have thoughts on qualifying for the free year? Must have been bought through Apple, or is carrier purchase okay? Thinking it is tied to device on Apple ID?

 

[AndiG]

First of all Apple TV is dead since every TV has some nice Netflix/Amazon/Hulu Buttons on its remote control. It is so easy and so cool, none of the Apps tells you "this content is not available to buy cause Apple charges 30%".
Additionally Apple constantly refused to open AirPlay (until a few months ago), so nearly none of the actual installed base of TVs support it. Bad decision, wasn't it - Apple?

An additional streaming channel without violence and sex, totally clean and sterile? Additionally all people Apple tortured with is restrictive policy and tortured with hardware that has no escape key, bad keyboard, no ports, soldered RAM and soldered SSD - all of them will refuse to spend a single dollar on AppleTV+ (at least hopefully).

I kicked my AppleTV ignoring all the content I own just to break free.

 

[johnyslats]

Anyone have thoughts on qualifying for the free year? Must have been bought through Apple, or is carrier purchase okay? Thinking it is tied to device on Apple ID?

Carrier is fine...

 

[Baymowe335]

Doubt AAPL at your own peril.

Morgan Stanley (Huberty) has been more consistently right on AAPL than any other firm.

 

[BuddyTronic]

Someone bought apple stocks and hope for a pump lol.

thsts funny

 

[jjudson]

I'm really not that crazy about Apple's foray into this market. I think it's moving them away from their core audience and takes attention away from their hardware and software initiatives.

We have more than enough media companies out there already.

 

[citysnaps]

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

That's funny characterizing $9 Billion as nothing.

 

[jjudson]

However, almost everyone I know subscribes to one or more streaming video services (I do Amazon, Netflix, HBO, DC, & Disney+).

This is the problem. The streaming video media service industry is becoming saturated. All of them have subscription fees. There's only so many that people can sign up for (without the cost becoming ridiculous -- especially to watch one or two shows per service). I think most people are cutting back on watching TV overall anyway. And those who do watch have so many options -- not to mention the 150 channels on cable and satellite. I just can't get excited about another "Hulu". I really don't understand Apple's move into this and I really wish they would look to continue innovation (or maybe go back to innovation) in their core business.

 

[bookcase]

I bought an iPhone 11, which comes with a free year of Apple TV+ -- that's plenty of time for me to decide whether it's worth it or not. I'm definitely in for Disney+ when it launches, on top of my Netflix, Hulu, and HBO GO subscriptions.

 

[bsamcash]

And I predict no.

 

[Unggoy Murderer]

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 sure both markets are comparable. It's probably odd for people to have more than one music streaming service at a time, unless they're desperate for any exclusives. It's not uncommon for people to have more than one TV streaming service at the same time, and I'll bet it'll be normal to have three or four soon. I can see me having Netflix, Prime, Apple TV+ and Disney+ in my household - and there's a lot more I'd like but can't justify!

 

[Justanotherfanboy]

This is the problem. The streaming video media service industry is becoming saturated. All of them have subscription fees. There's only so many that people can sign up for (without the cost becoming ridiculous -- especially to watch one or two shows per service). I think most people are cutting back on watching TV overall anyway. And those who do watch have so many options -- not to mention the 150 channels on cable and satellite. I just can't get excited about another "Hulu". I really don't understand Apple's move into this and I really wish they would look to continue innovation (or maybe go back to innovation) in their core business.

I think episodic media creation is still a burgeoning arena... & will continue to be for some time to come.
In our very recent history, the only “good” stories were told at the cinema. TV was primarily schlock. However, now- w/ shows like Stranger Things, the Walking Dead, Game of Thrones, etc. it is clear that equally (if not better) tales are being told via television. Ubiquitous 4K was/is a game changer. Short of an imax experience, the theater has little to offer me over home watching.
Now, I have absolutely NEVER had cable in my life (thank heavens!), however I am familiar enough to know that even a “cheap” package w/ primarily garbage channels is going to be in the neighborhood of $50/mo. with better than 3/4 of those channels never watched at all.
In my example- and I am probably a fairly heavy subscriber, w/ Amazon, Netflix, HBO, DC, and Disney+. That gives me much, much, much, much more quality options of shows & movies than any basic cable package that has ever been offered, zero commercials, and all for about $30/mo.
If I were to literally double my subscriptions, I’d probably be bumping up against the lower median of what the average cable user is paying.
The idea that this field is saturated already is incongruous with reality.
I’d say cable was saturated with unwanted channels & advertising. The replacement of that paradigm still has plenty of headroom.
And... I apologize for disagreeing with nearly every single thing you said, but I don’t think “most people are cutting back on watching TV overall anyway” is anywhere approaching reality- quite to the contrary, w/ the incredible and palpable uptick in television quality, I think TV is being watched more than ever, right now.

 

[now i see it]

The "revenue" generated by this service initially and maybe forever will be obfuscated by the fact that every Apple iOS device & computer sold will come with a 1 year free subscription. If apl sells 100 million new devices (or more) per year, that will be counted as 100 million new TV subscribers- even though not a single person pays a penny for the service... and will show up as $5,988,000,000 in TV+ annual revenue.... when actually it will be $0

 

[timborama]

I'm guessing Apple TV+ will be long gone by 2025.

 

[Justanotherfanboy]

The "revenue" generated by this service initially and maybe forever will be obfuscated by the fact that every Apple iOS device & computer sold will come with a 1 year free subscription. If apl sells 100 million new devices (or more) per year, that will be counted as 100 million new TV subscribers- even though not a single person pays a penny for the service... and will show up as $5,988,000,000 in TV+ annual revenue.... when actually it will be $0

I don’t think that’s how numbers work.

 

[BvizioN]

By 2025 the monthly price will have increased to $29.95.

Guys like you here "predicted" it would already start at that price from the start!

 

[Cosmosent]

... by Morgan Stanley analyst Katy Huberty.

That's NOT an Analyst !, that's an "AAPL Cheerleader" masquerading as a Pro Stock Analyst.

There are two others just like her, you know them by their last names, Munster & Ives.

The three best that I know of are Jeff Kvaal, Tony Sacconaghi, & Dan Niles.

 

[incoherent_1]

Emphasis on “$9 billion revenue business.”

Spending $9.1 billion in order to get $9.0 billion in revenue (a net loss of $100 million) doesn’t sound as impressive, does it?

I’m not convinced there’s a lot of profitability in this dogpile into TV content streaming. Least of all for Apple — at least the others have experience in that space.

 

[Baymowe335]

That's NOT an Analyst !, that's an "AAPL Cheerleader" masquerading as a Pro Stock Analyst.

There are two others just like her, you know them by their last names, Munster & Ives.

The three best that I know of are Jeff Kvaal, Tony Sacconaghi, & Dan Niles.

Hahaha, funny those you think are the best are the most bearish. Huberty has been RIGHT and Toni has been consistently dead wrong, constantly predicting things that don’t happen. He’s probably literally the worst Apple analyst.

As we see AAPL trading at $243, Katy called this last year.

Sacconaghi had a $160 price target for AAPL because he focused too much on hardware sales, then later in 2019 realized he was an idiot and raised it to $190. Well, he’s still wrong.

Meanwhile, Katy had a $247 target and nailed it...she understands services revenue being the market driver.

Niles said to short AAPL...wrong. His firm shorted and is now getting crushed.

Kvaal has a $265 target, so he must be a cheerleader too.