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How does it feel to lose a billion dollars a year, Apple?

How does it feel to lose a billion dollars a year, Apple?

  • 20.03.2025 10:34
  • phonearena.com
  • Keywords: Losing Money, Streaming Service

Apple is losing over $1 billion annually on Apple TV+, despite a $96 billion services revenue. The platform struggles to compete with Netflix and Amazon, leading to budget cuts and management changes.

Apple ServicesAAPLsentiment_dissatisfiedNFLXsentiment_satisfiedAMZNsentiment_satisfied

Estimated market influence

Apple

Apple

Negativesentiment_dissatisfied
Analyst rating: Buy

Apple is losing over $1 billion annually due to Apple TV+.

Netflix

Netflix

Positivesentiment_satisfied
Analyst rating: Buy

Netflix has a larger market share in streaming services compared to Apple TV+

Amazon

Amazon

Positivesentiment_satisfied
Analyst rating: Strong buy

Amazon has a larger market share in streaming services compared to Apple TV+

Context

Analysis of Apple TV+ Financial Challenges and Market Implications

Key Facts and Data Points

  • Annual Losses: Apple is losing over $1 billion annually due to its Apple TV+ streaming service.
  • Budget Cuts: Apple reduced its content spending by $500 million, bringing the annual budget down from over $5 billion.
  • Subscriber Growth: Apple TV+ reached 45 million subscribers in 2024, but this growth has not translated to profitability.
  • Content Investment: The service spent $200 million on the movie "Argylle" (2024), which received a low IMDb score of 5.6/10.

Market Trends and Industry Implications

  • Streaming Competition: Apple TV+ lags significantly behind Netflix and Amazon in terms of market share, with respective viewer percentages of 8.2% and 3.5%, compared to Apple's less than 1% in the U.S.
  • Content Variety: The lack of a diverse content library is a key factor hindering Apple TV+'s growth and competitiveness.

Business Impact and Strategic Considerations

  • Ecosystem Strategy: Apple TV+ was designed to enhance ecosystem "stickiness" by bundling it with other services like iCloud+ and offering free trials. However, there is no clear evidence of its impact on hardware sales.
  • Leadership Changes: The departure of Peter Stern, former head of Apple TV+, led to a restructuring of the services division, with new leadership under Oliver Schusser and Adrian Perica.

Financial Context and Long-Term Effects

  • Overall Revenue Growth: Despite losses from Apple TV+, Apple's overall services revenue grew by 13% in the last fiscal year, reaching over $96 billion, driven by successful services like iCloud+ and the App Store.
  • Regulatory and Competitive Pressures: The streaming service landscape remains highly competitive, with major players like Netflix and Amazon continuing to dominate.

Strategic Shifts and Future Outlook

  • Cost Management: Apple's decision to cut its content budget reflects a shift toward more cost-effective strategies in the streaming space.
  • Focus on Ecosystem Integration: While direct competition with top-tier streaming services is unlikely, Apple appears to be focusing on integrating Apple TV+ deeper into its ecosystem rather than scaling up subscriber numbers.

Conclusion

Apple's $1 billion annual loss from Apple TV+ highlights the challenges of entering the highly competitive streaming market. However, the company's broader success in other services provides a financial buffer, allowing it to absorb these losses while re-strategizing for long-term growth.