“Apple TV+ will likely never be material financially for Apple in and of itself,” Sacconaghi said in a note to clients Monday. “But it is an additional subscription-based revenue stream that can help its Services business grow and is a powerful bundling vehicle.” The company already offers Apple TV+ in its Apple One service bundles. Those bundles also include Apple Music, Arcade and iCloud. The most expensive service tier adds Apple Fitness+ and News+. Apple TV+ Could Be In Hardware-Services Bundle. However, Apple TV+ could be a “powerful part” of a bundled hardware-with-services offering, Sacconaghi said.
Apple TV+, the tech giant’s subscription streaming video service, is probably only going to be a small part of its overall business. But if Apple (AAPL) increases its service bundles, it might have a significant impact, according to a Wall Street analyst. Apple TV+ has, according to Bernstein analyst Toni Sacconaghi, roughly 30 million members who each pay $4.99 per month. However, he claims that despite spending around $3 billion a year on content, it is losing more than $1 billion annually. The service was introduced by Apple in November 2019.
“Apple TV+’s focus is clearly on quality over quantity, consistent with Apple’s brand,” Sacconaghi said. Notably, Apple’s original programs have already won about 250 awards, including this year’s Academy Award for Best Picture for “CODA.” Sacconaghi rates Apple stock as market perform. On the stock market today, Apple stock ended the regular session unchanged at 141.66. “While we see some opportunity for Apple to outperform modestly over the next few months given its historical seasonal trading pattern, we believe risk/reward on the stock over the next 6 months to 2 years is neutral to modestly negative,” Sacconaghi said.
“Apple TV+ would likely be an integral part of any potential hardware-plus-services subscription bundle (possibly along with iCloud and AppleCare), which press reports have recently speculated on, and has long been discussed within the investment community,” he said. Apple is a niche player in the streaming video market. It focuses on original, prestige content mostly for adults. Its shows include “Ted Lasso,” “The Morning Show,” “Severance,” “Slow Horses,” “Shining Girls” and “Schmigadoon!”