Before I begin this post about the latest news out of Apple TV+, I’d like to ask for a show of hands: Is there anyone else out there who’d like to take a stab at rewriting The Information‘s story today about how Apple’s streamer is on track to lose $1 billion? Because right now I’m only seeing around two dozen aggregated takes and useless rewrites of the news. I’m sure the hot take machine can do better than that.
In all seriousness, here’s the top-line takeaway that everyone is just straight-up rewriting: Basically, Apple TV+ is reportedly losing more than $1 billion a year. Ouch, right? Especially considering it’s reportedly spent more than $5 billion a year on content since launch, and so far, it’s managed to garner some 45 million subscribers — a drop in the bucket compared to Apple’s estimated installed base of some 2 billion active devices globally.
Now that we’ve gotten those key points out of the way, though, let’s do something that I’m not really seeing from any of the rewrites of The Information‘s story: Specifically, let’s go a little further.
First and foremost, Apple has a current market cap as of this writing of $3.2 trillion. A $1 billion loss (in a non-core division for the iPhone maker, let’s not forget) certainly looks huge, but it amounts to a mere 0.03% of Apple’s market cap. That size of a loss within an overall company is not generally something that would spook investors, unless it’s seen as reflective of a larger issue — say, mismanagement or reckless spending, for example.
Along these same lines, another reason why there’s probably not cause for investor concern here is that Apple leadership has been very clear that the streaming losses are not unexpected. Rather, they’re part of Apple building up a business in a hyper-competitive market against very strong, already well-established rivals. If Apple TV+ were the only streamer bleeding money, that would be a whole other story entirely. In that case, there would almost certainly be investor scrutiny of potential mismanagement. Outside of Netflix, though? Almost all of the major streamers are struggling to make a comfortable profit.
Oh, and speaking of mismanagement: How about that Netflix news from earlier in the week that I wrote about here, about the millions Netflix spent on a TV show that doesn’t exist and whose “producer” spent the money on luxury goods and crypto?
Also worth considering: Apple TV+ launched in November of 2019, a little over five years ago. For some perspective, Netflix launched in 1997, and it had only just gotten around to launching its first major streaming original, House of Cards, six years later. Whereas Apple so far has already built up a solid library of originals from scratch, without relying on a third-party library. Apple TV+ has also racked up a slew of industry awards, including a Best Picture Oscar for the movie CODA — an award that Netflix has been trying and failing to win for years.
Honestly, the reaction to Apple TV+ from a certain section of the tech press and blogosphere has been unapologetically unfair ever since the streamer launched. Since before it launched, actually, when there were whispers that Apple CEO Tim Cook himself was intervening to make sure there’d be hardly any cursing or sex in Apple’s shows (a ridiculous rumor that, based on all the Apple TV+ content I’ve watched, had no basis in reality).
To recap: Apple takes a curated approach to streaming, and you bemoan that it’ll never be as significant as Netflix. Apple spends heavily to get in the game, and you accuse it of wasting money. Cook and other executives eventually tighten up on spending, and now it convinces you the streamer’s demise is just around the corner.
The bottom line: A temporary $1 billion loss as part of a long-term investment is not statistically meaningful from a $3 trillion company unless it’s part of a growing trend of losses throughout that company’s business, reflects deep structural problems, or affects investor confidence in strategy or leadership. Now, if you’ll excuse me, I’m going to prepare for the Severance Season 2 finale tonight.
