Apple is losing more than a billion dollars a year on its AppleTV+ streaming service, reports the far-left Deadline.
Since 2019, Apple has spent more than $5 billion a year on Apple TV+ content and does not have much to show for it. The closest it has come to a show anyone has heard of is Severance, while its theatrical features like Ridley Scott’s Napoleon, Martin Scorsese’s Killers of the Flower Moon, and the re-teaming of Brad Pitt and George Clooney in Wolfs, have been expensive box office (Wolfs wasn’t even released theatrically) and critical bombs.
Like all streaming services, Apple TV+ counts on subscribers to make a profit. Unlike other streaming services, it offers very little content outside of its own, which means no back catalog. For context, Netflix has about 300 million worldwide subscribers. Apple TV+ has only about 45 million.
The real news, however, is this: In the most recent fiscal year, Apple brought in $391 billion in revenue which delivered a net profit of $94 billion.
When you’re making $94 billion in profit every year, losing a billion or so on an upstart streaming service is nothing.
What makes this news?
Well, the fact that only trillion-dollar tech companies like Google, Amazon, and Apple can afford these losses. Other than Netflix, which was not only first into the streaming world but is one of the best-managed companies on the planet, how will entertainment companies like Disney, Paramount, Universal, etc. — companies worth less than 20 percent of its tech competition — continue to suffer losses competing with or not getting swallowed whole by one of these behemoths?
Apple could purchase Disney easy.
Streaming has changed everything, and we’re looking at a future with just a few streaming services while any entertainment holdouts flee the streaming business and supply content to the streaming survivors.
For more than a decade I’ve told you that these entertainment multinationals were propped up by a one-legged stool called cable/satellite TV. Fortunately for them, the game was rigged to remove merit from profit. Popularity and ratings didn’t matter. If your network was included in a cable package, that was all that mattered. You got paid merely for being included even if no one watched. It’s called a carriage fee. For example, only 600,000 people watch CNN. Even fewer watch the Disney Channel. Didn’t matter. If your channel was merely available as part of a cable package in 100 million homes, CNN (Warner Bros.) and Disney made more than $100 million per month on carriage fees.
Neither of those networks (and dozens of others) can survive on merit — or advertising income based on ratings. No one watches them, and now only about 60 million households pay for cable TV and that number drops by millions each year.
Streaming is merit-based. People have to want to watch your content to subscribe to it. No longer can they be forced to pay for your lousy content (and network) through a monopolistic cable company. The results of this new world speak for themselves. Only Netflix is making money. All the others are losing a fortune or barely breaking even. Why? Because their content sucks.
Apple desperately needs a back catalog, so purchasing a studio like Disney makes perfect sense.
Streaming also has serious competition in the form of free streaming services like Pluto, Tubi, and FreeVee. The amount of free content is jaw-dropping and only growing larger. Why pay a subscription fee to a streaming outlet or cable company when there’s so much out there for the price of a few commercial interruptions?
Whoever survives will have no choice but to deliver content Normal people actually want to watch, which is very different from the cable TV-era where satisfying the customer was deliberately removed from the equation.
John Nolte’s first and last novel, Borrowed Time, is winning five-star raves from everyday readers. You can read an excerpt here and an in-depth review here. Also available in hardcover and on Kindle and Audiobook.
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