Apple TV+ is losing billions of dollars — as planned


Apple TV+ being promoted in an Apple Store in 2019



Apple is reportedly cutting its Apple TV+ budget as this is its only service that is losing money, but the report conveniently leaves out that the service has always been a loss-leader with benefits that can’t have a dollar-value.

The specific claim of the new report is that Apple loses $1 billion per year on Apple TV+. Of course it does.

It should be more, really, since the budget for Apple TV+ films alone, not even including serialized shows like “Severance,” was originally set at $1 billion annually.

While it sounds a lot — because it is — television and films are costly to make. Apple’s $1 billion per year is even on the low side, with Netflix estimated to be spending $18 billion in 2025.

Apple TV+ has also reportedly spent $20 million per episode of “Severance,” but then it’s said to have made the company back $200 million in new subscribers.

That per-episode cost for “Severance” was driven up by issues around COVID filming delays, but it’s still not that unusual. Netflix reportedly spent $30 million per episode of “Stranger Things” season four.

It has been reported before that Apple has trimmed its Apple TV+ budget, but this new report by The Information bizarrely believes Apple’s streamer is in trouble because it works the same way Netflix does. That’s not true — Netflix makes some money through international rights deals, but most of it comes from subscribers and advertisers.

Apple has no advertisers on Apple TV+ — at least not yet — and admittedly fewer subscribers than Netflix. But then Netflix gets no money from having, say, an incredibly popular hardware device that is its main product line.

What this report misses is that there is not one thing Apple does that is not directly tied to the rest of its business, most specifically the iPhone.

So it is doubtlessly entirely true that Apple TV+ is the only Apple Service that loses that much money, it’s equally doubtless that it’s one that drives buyers to the iPhone and other devices. And the sum total of Apple services including Apple TV+ helps keep people on Apple’s platform, even if it has recently released Apple TV+ on Android.

Then there’s the way that “Severance” and “Ted Lasso” have positioned Apple in the market. Both have become cultural phenomenons right now — and they are always going to be here.

In television production, there are periodically times when networks concentrate on entertainment series, otherwise known as shiny floor shows. Without question, it is incredibly cheaper to produce another season of “Dancing with the Stars” than it is to make “Monarch: Legacy of Monsters,” and entertainment shows get brilliant ratings.

They just do not get any repeat value. NBC will never re-show a whole season of “America’s Got Talent,” for instance.

But “Ted Lasso” and “Severance” are bringing in audiences now and they will continue to do so for years, perhaps even decades.

Shows like that are also tentpoles for a streaming service, since they project an image of great, well-made series. It’s Apple’s famous halo effect, just being applied to television and films.

So even if there were no direct income to Apple, it’s as impossible to estimate its financial benefit as it is to deny that Apple TV+ helps promote the company.

Severance, Apple TV+
You immediately recognize “Severance” and that’s part of how Apple TV+ raises Apple’s profile — image credit: Apple

Plus there is an income for Apple in subscriptions to Apple TV+, although there it is probably also a factor in pushing subscriptions to the whole Apple One bundle. And Apple, too, has deals with other firms such as airlines, or while it’s not clear if Apple TV+ is directly profiting, also now sales of its shows to other markets.

Then compare Apple TV+ to other Apple Services and it’s clear how it was always going to cost the company some serious cash. A subscription to the service now costs $9.99/month, and for the same price you could instead of 2TB of iCloud storage.

Only, iCloud storage does not cost Apple as much as making “F1” or buying “CODA.”

This new report quotes a recent Variety interview with Netflix co-CEO Ted Sarandos who was asked what he thought of rival Apple TV+.

“I don’t understand it beyond a marketing play, but they’re really smart people,” he said. “Maybe they see something we don’t.”

If Apple does see something else, it doesn’t need to. Marketing is enough, what Apple TV+ brings to Apple is enough.

Which, frustratingly, is also the conclusion of this new report despite author Wayne Ma again starting off sounding like Apple is unexpectedly hemorrhaging money and will go out of business.

It’s the same old story, Apple is doooooomed. Just don’t let it be doomed until they’ve finished the next season of “Slow Horses.”



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