Apple has reportedly held discussions with media agency and network executives about the prospect of selling ad time on its Apple TV+ streaming service, leading to speculation that an ad-supported tier could eventually be in the offing, possibly as soon as next year.
According to DigiDay, Apple's advertising chief Todd Teresi has led meetings with holding company executives to sell video advertising space, with more discussions reportedly on the cards in 2022. Citing an anonymous source, the report claims Apple has not asked one agency's network to put aside client dollars in the fourth quarter, suggesting the ad time could be available in early 2023.
Apple is aiming to triple its ad revenue from $4 billion per year to double-digit figures by expanding its advertising to more apps and services, and Apple executives clearly see TV+ as having untapped potential.
Currently, Apple's advertising spots are spread over display ads in its News and Stocks apps, as well as for apps in the App Store, across iPhone, iPad and Mac. Apple also already generates revenue on Apple TV+ with commercials during MLB Friday Night Baseball streams, although those spots are sold by MLB. In 2023, it will be the exclusive home of Major League Soccer for the next 10 years, with ad space and sponsorship deals shared by both Apple and MLS.
It's not clear how Apple might intend to inject ads into its $4.99-a-month TV+ streaming service, but it could potentially be a lucrative revenue driver if the company was to follow the lead of Netflix and Disney+ by providing an ad-supported tier.
Apple still has a limited amount of original content compared to other streaming services, and it is unable to draw the same subscriber numbers as Hulu, Netflix, and Disney+. By offering an ad-supported or even free subscription plan, Apple could increase its low audience figures without sacrificing its commitment to premium original programming and movie content.
In May it was reported that Apple's senior vice president of services Eddy Cue had restructured services management with the aim of focusing more on streaming and advertising. As a result, Teresi has taken on more responsibility and has been reporting directly to Cue since the beginning of the year.
Since then, Apple has been in talks to secure more sports content deals, including a deal for a Big Ten college football and basketball streaming package. Rumors indicate that Apple is also pursuing the National Football League's Sunday Ticket package. In the past, it has also discussed a content deal with Pac-12.
With each effort Apple makes to ramp up its sports offerings, another window of opportunity for ad revenue presents itself. Whether the ad sales strategy that evolves from these moves will fundamentally change the perception of TV+ as a privacy-first player in the streaming services market remains to be seen.
