Not really. Apple TV needs content and what better way to provide exclusive content to customers than to reinvent cable TV circa 1999. High definition? Check. On demand? Check. Monthly payments? Check.
As usual, Apple is late to yet another party. Who else has a streaming television service? Netflix is the big dawg. Google has YouTube TV. Then there’s Sling, Sony, Hulu, and a dozen others, all of whom want you to spend money by the month to watch an ever increasing catalog of television and movies.
Netflix has nearly 140-million paying subscribers. Some market analysts say Apple could have 100-million subscribers by 2024 and that would add up to $10-billion in annual revenue to the company’s overflowing coffers of cash.
Uh, no. None of those numbers make any sense and Jeffrey and I did the math to prove it.
Analyst Daniel Ives:
If Apple executes with minimal speed bumps and aggressively acquires content given the company’s massive installed base and unmatched brand loyalty we believe reaching 100 million subs in the medium term (3 to 5 years) is a realistic goal
Somehow that translates to about $15-billion in annual revenue so allow me to examine those numbers first.
Revenue is dependent upon total subscription numbers and the estimate for Apple’s package is about 100-million subscribers by 2024. But at how much per month? Google’s YouTube has a few million subscribers at $40 a month. Netflix has almost 140-million subscribers at $13 per month.
Do the math.
2-million YouTube TV subscribers gets Google $80-million a month, or an annual run rate of less than $1-billion. The same math method applied to Netflix gathers about $1.8-billion a month in revenue, or an annual run rate of $21-billion, and that’s not far off actual Netflix financials.
So, how does Apple get to 100-million subscribers by 2024?
Apple Music has been around four years, and with nearly 60-million subscribers, still can’t catch Spotify. How will an even more expensive video subscription service that competes with a dozen other well-entrenched streaming services get to 100-million?
While acquisitions have not been in Apple’s core DNA, the clock has struck midnight for Cupertino in our opinion and building content organically is a slow and arduous path, which highlights the clear need for Apple to do larger, strategic M&A
Buy Sony. Buy Disney. Buy Netflix. Buy somebody. Buy Tesla.
Prognosticating the future, I predict Apple’s streaming video service will be a slick package of expensively produced, high definition original video programs priced like cable TV from 1999. But 100-million subscribers? No. 100-million subscribers at $20 a month would bring in $2-billion a month and $24-billion a year.
None of that will happen by 2024.