Apple losing over $1B a year on streaming service | Hacker News Reader

Apple losing over $1B a year on streaming service

reuters.com

36 pointsmgh244 comments

Maybe leadership at Apple want to make good TV and they’re using some of Apple’s incredible wealth to bootstrap it or passion project it?

Consistent with that - Steve calling the original Apple TV a “hobby”. This was during the days of Front Row, when Apple bundled remotes with iMacs and they had their own “media console” like software.

Another source: spend 4.5B, lose 1, 45M subscribers, engage 3.5hrs/day - invest if AI is overhyped

https://www.youtube.com/watch?v=Ht5GlAaoOzM

I keep thinking that number would means Apple get $3.5B back. At $120 per year, that is 30 million paid subscribers. But we also know a lot of Apple TV+ subscribers are from gift, Mobile network give away etc. I would assume a lot of those are coming from Apple's Marketing Budget, which is basically shifting it within Apple.

I would not be surprised if it was closer to $2B if not more on lost.

Then explain the second season of Severance.

Unlike other streaming networks, Apple TV has a lot of backing from leadership to remain prestige and passion driven, as it's a good loss leader and brand maker for Apple.

For example, look at the zeitgeist Ted Lasso, Severance, Tehran, and Pachinko have all been able to leverage.

And Apple could lose a billion a year for decades if it wanted to.

Yep! They probably don't want to and most likely have a plan on better monetizing Apple TV, in the short term the brand making aspect is well worth it for a brand like Apple.

I wouldn't be surprised if Apple TV ends up acquiring a prestige production house at some point, or uses Apple TV to enhance other marketing partnerships with adjacent brands.

Their foray into sports with MLS is a good example

> I wouldn't be surprised if Apple TV ends up acquiring a prestige production house at some point

I agree, AND I’m similarly asking why I agree myself: there were always persistent rumors under Steve that Apple would one day acquire Disney, they were always fun to think about in a “what if” way, _and_ it seems hilariously impractical in retrospect.

Alternatively - and now that I'm thinking about it - I think Apple TV might adopt the A/24 model of purchasing individual movies and shows that they like, and marketing it like crazy.

In fact, that does seem to be Apple TV's model already. For example, Ted Lasso, Mythic Quest, Pachinko, Foundation, Silo, Severance, The Studio, and For All Mankind are all produced by entirely different production houses but licensing for them was acquired by Apple.

There is some crazy stat that apple could stop selling everything they make and still run operations for another 25 years or something wild like that.

Amazon MGM is like that too

> as it's a good loss leader

Brand maker is hard to argue with because it's so vague, but how does Apple TV function as a loss leader? Isn't the idea of a loss leader that it's supposed to help sell whatever actually makes money?

How does Apple TV sell hardware for Apple? The only person I know with a subscription has an Android phone and Windows laptop and signed up just long enough to watch Severance.

They don’t really need more customers, they just need to keep the ones they have

What is Apple TV doing to accomplish that goal, though? Are you saying there are some fraction of Apple customers who would switch to Android or Windows if Apple didn't have a streaming service?

Do you know many families? I can’t really think of one in my bubble without an Apple One subscription at this point except for the Spotify holdouts.

Bundling the new HBO with Apple Music has got to be very easy to sell.

Apple TV 4K boxes also stream TV+ at a much higher bit rate than any other service but that’s a bit enthusiast.

I don't know a single person in my country with an Apple One subscription.

That's 100 million people right there.

I don’t know if your country has very many upper middle class WEIRD families entirely embedded into the Apple ecosystem, but it’s become noticeably more common here post Ted Lasso era I think.

I don't think Apple makes any content that isn't for Americans do they?

I guess Slow Horses is British but very little of what they air has any real appeal in Asia so no one is going to pay for it.

Pachinko was big in South Korea when both season 1 and 2 were released, and plenty of ad time was given to it in SK.

Arguably Tehran was in a similar position as well, but it was an already existing show on Kan 11 that Apple got the international licensing rights for - same way HBO Max got Sha'at Ne'ila/Valley of Tears.

Don't forget HBO's Homeland and Hatufim/Prisoners of War.

How many people do you know?

I know plenty of families. Including my own. Three of us, with iPhone 16s. Two of us with recent iPads. Three of us with Apple Watches. There's 5 MBPs. Three Apple TV 4Ks, a Mac Studio.

And no Apple One.

"Spotify holdouts" kinda makes it sound like you see them as misguided. I have no love for Spotify. I love Rdio (RIP). Tidal (I loved, but can't see lasting much longer, but it pays quite a bit more to artists than Apple, and a LOT more than Spotify).

Apple TV has a few good original shows.

> Bundling the new HBO with Apple Music has got to be very easy to sell.

Uhh, sure. https://music.apple.com/us/curator/hbo-max/1536480621 - oh good, I can listen to the soundtrack to.... FBoy Island, 12 Dates of Christmas, and some of the reality TV stars of ... Sweet Life: Los Angeles? Maybe we have different definitions of "very easy sell".

I'm surprised Apple Arcade is still a thing. But there it is across all Apple One tiers. Meanwhile to get Fitness and News you have to go to the Premier tier.

Oddly enough, Apple is providing obscure supplemental material for die-hard fans, distributed in e-book form for iDevices. You can read the satirical self-help book The You You Are from Severance for free, but you absolutely must have an iPhone, iPad, or Mac.

Ok, what exactly does this zeitgeist leveraging get for Apple?

Not brand recognition, the brand is well known. Is it some goodwill with…who exactly?

For instance I can see why big corps underwrite public television programs. The audience says “That’s a good company,” and the company talks up its community investment anytime it can.

What is Apple getting for the billion it is spending on TV? Maybe the CEO gets to rub elbows with Jennifer Aniston and Reese Witherspoon? I’m not seeing what that does for the company, but seriously, sometimes that kind of ego nonsense drives decisions.

Losing $1 billion distracts from the many billions they get from 30% App Store fees.

Fortunately we also have Android with its many high-quality app store alternatives[1] like the Amazon Appstore, and Google Play's low platform fees[2].

[1] https://www.androidauthority.com/best-app-stores-936652/

[2] https://sharpsheets.io/blog/app-store-and-google-play-commis...

In addition to infosample's comment, it also gives Apple a presence in the news that's unambiguously positive over, say, the AI company du jour. (After all, Apple's financials won't tell you about flops.)

Isn't that mostly just a function of it being newer? All the other streaming services focused on being prestige loss leaders in their early years too.

Apple TV+ started in 2019. Hulu and Netflix streaming in 2007. HBO Go in 2010. Etc.

Unlike the other players (except Amazon), Apple is not primarily a streaming company, so it makes it easier to bundle streaming as a loss leader while leaving open the option to do a tuck-in acquisition of high value IP if the opportunity arises (eg. MLS games).

>it's a good loss leader

And that is problem. Old era Apple dont do Loss leaders. Apple TV+, or the services strategy involving News+, Fitness+, Arcade, Music etc are fundamentally different to old / Steve Job's Apple.

All of them were created hoping it is valuable enough so you could subscribe to Apple or "Apple One" in a bid to hide and leverage the $30B raw profits from Google Search and App Store.

Steve once said IIRC in D9, you create a great product, then you figure out the go to market strategy. Right now Apple is the other way around, at least for Services, they figure out the strategy, and then think about what product should go in that strategy.

People don't want to pay a monthly subscription to watch 5 good shows (all drama, btw). Apple TV lacks breadth for the average consumer, at least relative to the competition.

It’s so funny, when Netflix got going streaming it was a revolution. Getting away from paying tons of cash to cable providers. Now we are right back to where we are started.

I signed up to sportsnet to watch nhl games, but guess what? Amazon prime has exclusive rights to some games! So I gotta have two subscriptions. Truly piracy is easier.

Enshitification intensifies.

Netflix was unique it basically was a repeat of the early days of cable.

When cable came about it had access to a massive library of content that people didn’t know how or well couldn’t effectively monetize due to the fact that you had only limited number of channels and thus didn’t knew what it was actually worth.

You used to have 100’s of channels on basic cable that all now could broadcast 50+ years of TV and film content.

Cable broke through the bandwidth limit which at the time was basically the number of channels available. Instead of the 20 or so channels that were possible on broadcast TV you had 100’s.

Once people realized what their library was worth and how relatively cheap it was to setup your own cable channel things turned and we got premium cable.

Streaming was the same it basically took out the time multiplexing out of the equation completely.

However as just like cable it was an unproven business model especially when Netflix came to the scene people weren’t sure if it was worth the investment so Netflix had effectively a monopoly on a vast library of content which it licensed for pennies on the dollar.

Once it proved that the model is viable all the content holders jumped on the bandwagon.

We will never have another Netflix moment as the most likely next big jump in entertainment is most likely bespoke or at least viewer tailored AI generated content.

Don't forget about binging. You can subscribe for a month and watch all the episodes of a show in a few weeks/days. If it's one show I might be tempted to torrent it, but being able to watch on whatever device I have near me is very useful.

Non-drama good shows (IMHO) from Apple TV+ include but are not limited to Shrinking, Ted Lasso, Mythic Quest, Trying, Schmigadoon (this one is weird though).

Anyways YMMV as usual.

Netflix lost money its first 13-years (in aggregate).

And wasn’t really until year 18-year, that the money it made became meaningful.

When you don’t have a catalog, creating content is expensive.

https://www.statista.com/statistics/272561/netflix-net-incom...

Steve Jobs had Pixar and iTunes; Tim Cook had Apple TV+, I guess. Apple couldn’t possibly be Apple without some play at cultural significance.

I know old Stevenotes in the heyday of iTunes would make a habit of bringing in musicians to show they could - John Mayer etc. - and I guess Ben Stiller and Adam Scott may be up next.

Apple famously does not track profits by division but profits overall-

How can you spend so much when it only has 10 shows and 10 movies?

They struggle to even fill the top 10 list because they often don’t have enough shows or movies.

That’s… not true? “As of June 2023, Apple TV+ has nearly 200 movies and TV shows in its catalog.” Not a lot, but still not 10…

Currently Apple has 54 billion in cash and cash equivalents (down $100B since 2023 in dividends, stock buybacks, and capex). They can keep this going for a while.

Honestly it might be a bargain, simply for maintaining a certain brand image. Apple has a huge pile of cash, and with respect this is content very very very few other companies are willing to or can afford to make. It buys Apple a kind of mind share that will last & endure & keep paying our, will maintain the Apple name, in a way that nothing else Apple could possibly do would.

Worth it.

Reply on news.ycombinator.com