Streaming TV Service Revenue Will Be a 'Drop in the Bucket' for Apple, Even If It Rivals Netflix

Discussion in 'MacRumors.com News Discussion' started by MacRumors, Feb 18, 2019.

  1. MacRumors macrumors bot

    MacRumors

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    Analyst Tim O'Shea recently published a new research report looking at the impact of Apple's upcoming streaming TV service on the company's overall financial earnings (via Business Insider). According to O'Shea, even if Apple priced the service at $15/month (and took a 30 percent cut, while the rest went to video production partners), the resulting revenue would just be "a drop in the bucket."

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    O'Shea predicted that if Apple could get to 250 million subscribers by 2023, it would earn the company $13.5 billion in revenue and account for about 5 percent of the company's revenue that year. Not only that, but 250 million subscribers in four years is a generous prediction, given it took Netflix 12 years to reach its 139 million subscribers as of January 2019.
    To be clear, O'Shea isn't predicting that Apple will price its streaming TV service at this level, but the analyst is simply providing a "what if" scenario for the launch of the service. CNBC previously reported that Apple will offer its original TV shows for free to Apple device owners, and new reports have suggested that users will be able to add more premium channels onto the service at a cost.

    As part of these recent rumors, it's also been suggested all users will have to pay a monthly subscription to gain access to Apple's original TV shows. In regards to these rumors, a price has not yet been put forward. More clarity should be given to Apple's streaming service on March 25, when the company is expected to host a major event debuting the service and outlining its big features.

    Article Link: Streaming TV Service Revenue Will Be a 'Drop in the Bucket' for Apple, Even If It Rivals Netflix
     
  2. ipedro macrumors 601

    ipedro

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    He’s not accounting for the hardware sales achieved by retaining people within the Apple ecosystem.

    iTunes sold music but above all, it sold iPods and from there, the halo effect lead to new Mac users, impressed with the Apple experience, switching from PC.

    That iPod halo effect lead directly to the iPhone whicH is responsible for the world’s first trillion dollar company.
     
  3. markaceto macrumors member

    markaceto

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    A drop in the bucket for subscriptions is where Tim does his best work.
     
  4. Reason077 macrumors 68020

    Reason077

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    That's 250 million subscribers who will be kept a little more happy and secure inside the walled garden.

    Besides, $13.5 billion in revenue? That's roughly half of what Apple makes each year selling Macs!
     
  5. syklee26 macrumors 6502

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  6. RedGala macrumors regular

    RedGala

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    But I feel like video streaming is not something that should ever be hardware-specific. I'm pretty opposed to the idea of having services that don't require extra security not existing on multiple platforms. Either way, I assume that the streaming service will be Multiplatform, since it would be really really really dumb to not have the content available on a browser.
     
  7. w5jck macrumors regular

    w5jck

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    There is a reason why cable and satellite service costs so much--it is expensive when you have to pay each source for the rights to stream their shows, and each source wants a king's ransom and then some! Plus the cable and satellite service companies want to make a huge profit. From what I'm reading and hearing, most of the streaming companies like Netflix are struggling to make profits because they are trying to price their services way below cable and satellite in order to compete against them. Personally I don't think any of the big players in streaming will be able to produce enough shows to compete with cable and satellite, and their prices will be way too high for just a few shows. The only way to make their services attractive to large numbers of customers will be to pay the established networks and channels to include their shows, and that is way too expensive.
     
  8. EdT macrumors 65816

    EdT

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    With DirecTv ceasing satellite service within the next few years and Dish probably doing the same, though they haven’t announced it, I have to look at all of the different streaming services. Because of the cost of both Internet and Netflix/Disney/Hulu etc this is likely to become very expensive. If 5G wasn’t going to have data caps I’d say that is an answer, but I think data caps are going to become standard in all plans in one form or another. It may not be called a data cap but that will be its practical effect.
     
  9. JosephAW macrumors 68020

    JosephAW

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    If Apple is true to form then their pricing will be double other streaming services.
     
  10. mtneer macrumors 68030

    mtneer

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    I get a feeling that Apple is chasing yesterday's business. Especially if all other players disaggregate and each content owner sets up their own subscription service - there are only so many services you can subscribe to before getting back into the cable bill territory paying up $150/ month.
     
  11. dominiongamma macrumors 65816

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    Wish Apple would stop with the side shows and work on the products that could use some updating and lower prices .
     
  12. Baymowe335 macrumors 68040

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    It's just a means of "stickiness" for Apple, which is logical.

    Apple makes around 55X the profit of all of NFLX, so even acquiring the entire Netflix business would be a very small part of Apple's earnings.
    --- Post Merged, Feb 18, 2019 ---
    Streaming content is not yesterday's news. Apple has the money to buy all the content they need, which is the game.

    NFLX knows first hand how much cash is required to keep making/buying/licensing content. It's a cash drain.
     
  13. I7guy macrumors P6

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    A "drop in the bucket" to Apple is an ocean for other companies. Only expected to make $13B or so.
     
  14. neuropsychguy macrumors 65816

    neuropsychguy

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    How much does Apple Music cost relative to other services? What about movie purchases compared to other providers? How are Apple's iCloud storage plans compared to those of other providers?

    Hint: Certainly not "double" the price.
     
  15. NachoGrande macrumors 6502a

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    they better have some amazing original content if they want any chance.
     
  16. bozzykid, Feb 18, 2019
    Last edited: Feb 18, 2019

    bozzykid macrumors 68020

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    It would be impossible to get 250 million users with a walled garden approach. This is why Apple is expanding its services to other devices. They know they can't compete in the streaming tv world with a lock-in approach.
     
  17. BuddyTronic macrumors 6502a

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    No kidding right? Tell the author that “every drop counts”. It’s more high margin revenues for Apple!
     
  18. Rogifan macrumors Core

    Rogifan

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  19. scrapesleon macrumors 6502a

    scrapesleon

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    can we get something free for once I mean we already have a Apple TV
     
  20. Bawstun macrumors 65816

    Bawstun

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    I think I just read the average person now spends $37 a month in subscriptions (of various things, not just streaming). And that’s average...
     
  21. RudySnow macrumors 6502

    RudySnow

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    This is what I don’t understand. Is Apple charging for their own shows, or is this a cable bundle like Hulu/YouTube TV?
     
  22. PickUrPoison, Feb 18, 2019
    Last edited: Feb 18, 2019

    PickUrPoison macrumors 68030

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    #22
    His math sucks. Revenue would be $45 billion if Apple does a Netflix competitor. This isn’t an App Store 30%-cut revenue sharing model. That said, I don’t think they’ll get 250 million subscribers and I don’t think it’ll be priced at $15/month.

    He seems to be confusing two completely different concepts:
    • A Netflix-like streaming service where Apple gets all the revenue, but also has a ton of costs associated with producing original shows and licensing third party content; and
    • Taking a cut (it probably wouldn't be 30%) for getting people to subscribe to (and billing for) other streaming services, which would be available through the TV app: Showtime/HBO/STARZ/Disney/whatever. (Amazon Prime does this.) There could also be an element of live-channel streaming like Sling/PS Vue/Hulu Live/DirecTV Now, either through pass-through subscriptions or by creating their own similar OTT service.
    Can’t believe this guy’s getting paid for his “analysis”. What a mess.
     
  23. DNichter macrumors G3

    DNichter

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    It's all a value add for those that want to stay within the Apple ecosystem. Makes sense in the long run.
     
  24. falainber macrumors 65816

    falainber

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    That's assuming that 250M people subscribe to the service which is 5x Apple Music numbers. It sounds overly optimistic.
     
  25. BlargKing macrumors 6502

    BlargKing

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    #25
    So what, 15$ a month to watch some random people sit in a car and do crappy karaoke?
     

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