Streaming TV Service Revenue Will Be a 'Drop in the Bucket' for Apple, Even If It Rivals Netflix

Analyst Tim O'Shea recently published a new research report looking at the impact of Apple's upcoming streaming TV service on the company's overall financial earnings (via Business Insider). According to O'Shea, even if Apple priced the service at $15/month (and took a 30 percent cut, while the rest went to video production partners), the resulting revenue would just be "a drop in the bucket."

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O'Shea predicted that if Apple could get to 250 million subscribers by 2023, it would earn the company $13.5 billion in revenue and account for about 5 percent of the company's revenue that year. Not only that, but 250 million subscribers in four years is a generous prediction, given it took Netflix 12 years to reach its 139 million subscribers as of January 2019.

"It's going take a long time for this type of service to really move the needle," O'Shea told Business Insider. To figure out the potential of the video service, which Apple is widely expected to launch next month, O'Shea estimated that Apple would charge customers $15 a month and take a 30% cut, giving the rest to video production partners

If the service is extremely successful and attracts 250 million subscribers, it would yield $13.5 billion in revenue for Apple. That's nothing to sneeze at. After all, Netflix's total sales last year were $15.8 billion. But in the context of Apple, such a figure would be just a drop in the bucket.

In fiscal 2018, the company posted revenue of $265 billion. Though O'Shea and other analysts expect Apple's sales to drop sharply this year before slowly recovering in coming ones, $13.5 billion would still represent only a small fraction of the company's revenue.

To be clear, O'Shea isn't predicting that Apple will price its streaming TV service at this level, but the analyst is simply providing a "what if" scenario for the launch of the service. CNBC previously reported that Apple will offer its original TV shows for free to Apple device owners, and new reports have suggested that users will be able to add more premium channels onto the service at a cost.

As part of these recent rumors, it's also been suggested all users will have to pay a monthly subscription to gain access to Apple's original TV shows. In regards to these rumors, a price has not yet been put forward. More clarity should be given to Apple's streaming service on March 25, when the company is expected to host a major event debuting the service and outlining its big features.

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Top Rated Comments

ipedro Avatar
69 months ago
He’s not accounting for the hardware sales achieved by retaining people within the Apple ecosystem.

iTunes sold music but above all, it sold iPods and from there, the halo effect lead to new Mac users, impressed with the Apple experience, switching from PC.

That iPod halo effect lead directly to the iPhone whicH is responsible for the world’s first trillion dollar company.
Score: 15 Votes (Like | Disagree)
syklee26 Avatar
69 months ago
Monthly fee to watch that Karaoke crap?
Score: 12 Votes (Like | Disagree)
dominiongamma Avatar
69 months ago
Wish Apple would stop with the side shows and work on the products that could use some updating and lower prices .
Score: 11 Votes (Like | Disagree)
bozzykid Avatar
69 months ago
He’s not accounting for the hardware sales achieved by retaining people within the Apple ecosystem.
It would be impossible to get 250 million users with a walled garden approach. This is why Apple is expanding its services to other devices. They know they can't compete in the streaming tv world with a lock-in approach.
Score: 11 Votes (Like | Disagree)
4487549 Avatar
69 months ago
A drop in the bucket for subscriptions is where Tim does his best work.
Score: 7 Votes (Like | Disagree)
JosephAW Avatar
69 months ago
If Apple is true to form then their pricing will be double other streaming services.
Score: 7 Votes (Like | Disagree)