Apple TV+ loses $1 billion every year, according to new report

Apple TV+ loses $1 billion every year, according to new report

  • 20.03.2025 18:30
  • msn.com
  • Keywords: Streaming

Apple TV+ loses $1 billion annually despite trimming budgets, while traditional TV struggles as streaming services like YouTube and Netflix gain popularity.

Apple ReportsAAPLsentiment_dissatisfiedNFLXsentiment_satisfied

Estimated market influence

Apple

Apple

Negativesentiment_dissatisfied
Analyst rating: Buy

Loses $1 billion annually, trimming content budget, considering ad tier.

Netflix

Netflix

Positivesentiment_satisfied
Analyst rating: Buy

Gained market share as traditional TV loses ground.

Context

Analysis of Business Insights and Market Implications

Apple TV+ Financial Struggles

  • Annual Loss: Apple TV+ reportedly loses $1 billion annually.
  • Content Budget Cuts: The service has reduced its content budget by approximately $500 million, bringing it down to around $5 billion per year.
  • No Ad Tier: Unlike competitors such as Netflix and Disney+, Apple TV+ does not currently offer an ad-supported tier, which could help increase revenue.

Competitive Landscape

  • Streaming Market: Other major streamers like Netflix and Disney+ have achieved profitability in recent quarters, while Apple TV+ lags behind.
  • Price Increases: Apple TV+ has already increased its subscription price twice in the past year (from $5 to $10 per month), but further hikes or the introduction of an ad tier may be necessary to improve financial performance.

Market Trends

Decline of Traditional TV

  • Nielsen Data: Linear TV's share of total video consumption dropped to 44.4% in February, its lowest recorded level.
  • Streaming Growth: Streaming services now account for 43.5% of total consumption, up significantly from 26% in May 2021.

Shift in Viewer Demographics

  • Younger Audiences: Traditional TV is losing ground among younger viewers, with streaming platforms like YouTube and Netflix gaining traction.
  • Broadcast vs. Cable: Broadcast networks are faring slightly better than cable networks, which have seen a steeper decline in share.

Streaming Service Performance

YouTube and Netflix Dominance

  • YouTube Share: Captured 11.6% of total consumption in February.
  • Netflix Share: Secured 8.2% of total consumption, making it the second-largest streaming service behind YouTube.

Smaller Players

  • Tubi Growth: During Super Sunday (e.g., the Eagles vs. Chiefs game), Tubi saw a massive spike in viewership, reaching nearly 16 times its January 2025 average.
  • Paramount+ and Pluto TV: These services have smaller shares but are part of the growing competitive landscape.

Broadcast Highlights

Top Performers

  • Saturday Night Live 50th Anniversary Special: Attracted 16.5 million viewers on NBC.
  • Grammys: Drew 16.2 million viewers on CBS.

Sports Programming

  • NHL Game: The U.S.-Canada rematch on ESPN attracted 9.25 million viewers, highlighting the enduring appeal of live sports on traditional TV.

Market Implications and Strategic Considerations

For Apple TV+

  • Long-Term Effects: Continuous losses may force Apple to reconsider its strategy, potentially introducing an ad tier or further price increases.
  • Customer Retention: Free trials for new hardware purchases (e.g., iPhones, iPads) remain a key retention tool.

For Traditional Broadcasters

  • Adaptation Needed: Broadcast networks must adapt by investing in digital platforms and forming partnerships to compete with streaming giants.
  • Regulatory Impact: Potential long-term effects include regulatory scrutiny if market consolidation continues to erode competition.

For Streaming Services

  • Ad-Supported Models: The success of ad-supported tiers (e.g., YouTube, Peacock) suggests this model could be critical for future growth and profitability.
  • Content Strategy: Competitors like Netflix and Disney+ are likely to maintain their lead through high-quality original content and global expansion.

For the Industry

  • Shift in Advertising Revenue: The rise of streaming platforms will likely disrupt traditional TV advertising revenue, forcing marketers to adapt to new consumer behaviors.
  • Subscriber Churn: As more services compete for viewers, subscriber churn may increase, necessitating innovative retention strategies.