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

ipedro said:
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.
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And they just opened iTunes and TV Shows to many Smart TV, compared to iTunes, it was only on iPod.
 
A little late to a saturated market and will it be cross-platform without requiring Apple hardware purchase to have sufficient subscriptions to break even? On the other hand, with the power of Amazon AWS, Google Cloud, Microsoft Azure, etc. it's easy, cheap and quick to spin up new services as an experimental hobby.
 
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falainber said:
That's assuming that 250M people subscribe to the service which is 5x Apple Music numbers. It sounds overly optimistic.
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The estimate is for 2023. But I agree.

Apple seems to be planning services based on an aging demographic - those who grew up watching network television and are largely addicted to cable TV programming. Teens and young adults - Apple's future services customers - watch some Netflix-style programming, but largely spend their time on social media and (free) YouTube videos.
 
Bawstun said:
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...
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So their cable/Directv/etc is not a subscription? Pretty sure that $37 is in addition to their main delivery method.
 
EdT said:
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.
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Interesting - I hadn't heard of that. SpaceX and others are competiting to build a low altitude global satellite internet service. I expect that if 5G doesn't work for you (which I think it will), then one of these satellite internet providers might.
 
I don’t know what all these new stream services are thinking. Obviously they want a piece of the streaming pie directly, but everyone I know is already borderline dumping Netflix over a mix of a mountain of crap content and smattering of disagreeable politics. One hit show with A list content isn’t going to keep people subbing and Apple is in last place, probably even behind Crackle. We also don’t have money for multiple streaming services. We’re probably at Peak Sub on that already.
 
I think that the main point of the Apple TV service will be:
1. Include some "must have" shows that are free IF you are on an Apple device.
2. Include some other good content that is the up-sell for the next tier.
In short, Apple's Streaming revenues aren't meant to be a huge revenue source initially, and even if they only ever got to 10%, it would be something sticky to keep a lot of people in the ecosystem. Or get them to try it.

I would think Apple's goal is to increase device sales thereby getting people into the ecosystem and retaining people. This is similar model to the iTunes Store and the iPod and even now with music and movies. Once you've purchase 10, 20, 50 or whatever movies on iTunes, it is a good bet that you will keep at least one device to access them. Then you might want an Apple TV to let everyone watch Toy Story 4 or something. It adds up.

The key will be to have at least a handful of shows relatively soon that are compelling and free to owners of Apple devices. People will say, "that is free? But I want to watch it on the big screen with the family, so I need an Apple TV."

e.g. "I want to see the rest of the season or series if I switch to Android, I can't. Unless I get an Apple TV. But then I might as well keep the iPhone to tie everything together." or "Dang this Apple TV remote is hard, I'll get an iPad to help control it and to watch content." or "I'll spring for an Apple TV/iPad/iPhone/iPod Touch (if updated) to watch that show".
 
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neuropsychguy said:
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.
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Right. I'm thinking hardware.
 
w5jck said:
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.
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Netflix isn’t “struggling” to make a profit, whatever that means.
 
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ipedro said:
That iPod halo effect lead directly to the iPhone whicH is responsible for the world’s first trillion dollar company.
Click to expand...

Apple is not the first trillion dollar company in history and certainly not the most valuable.

As an example:

Dutch East India Co.
Industry: Global Trade
Value in Today’s Dollars: $8.2 Trillion

And a more recent example:

PetroChina
Industry: Oil Exploration and Production
Value in Today’s Dollars: $1.7 Trillion (early 2000's)

http://money.com/money/5282501/apple-trillion-biggest-companies-in-history/
 
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The only hope they have of competing with Netflix is to get their app on every and streaming box made. AppleTV alone won't cut it and neither will the Samsung deal.
 
No one will miss this service if it never sees the light of day. Apple should better stay focused to make all their existing services global and worthy. Most of them are half baked and they're mostly focused on the USA. Together with their mediocre hardware offerings and poorly state of software, I don't get they're entering this kind of service.
 
PickUrPoison said:
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% revenue) 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 their own new service.
Can’t believe this guys getting paid for his “analysis”. What a mess.
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Exactly!
 
ipedro said:
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.
Click to expand...
That’s over ambitious. Most ppl like me aren’t going to subscribe to a streaming service that’s proprietary. In other words if my choice was subscribing to Apple’s service and stay within their eco system. And say Netflix which will work on anything I have. Apple or not. I will pick Netflix 100 percent of the time.
 
My cable provider is getting 10x that ($150/month). If they could repeat with video content what they did with music, why would there be a $15/month ceiling?

$15 is what some people are paying today for audio without video (Apple Music Family plan). If there was a family video plan that allowed people to realistically cut out cable providers, it would be worth a lot more.
 
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250 million?
Gonna have to produce some pretty effin good shows to reach that, i dont even think Disney will come close to that number in 4 years
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JeffPerrin said:
Teens and young adults - Apple's future services customers - watch some Netflix-style programming, but largely spend their time on social media and (free) YouTube videos.
Click to expand...

So basically, stuff we can keep on in the background while we do other things? :p
 
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