First, let me separate Apple TV the living room appliance from an Apple TV, or streaming television service. Second, let me point out that none of the streaming TV players admit to having much success. So what?
About. The. Future.
Even the Apple TV appliance– easily the most expensive of all the streaming TV gadgets– isn’t much of a money maker for Apple. Streaming anything is a tough business with many players, but the big dawg is Netflix, with something close to 150-million subscribers. Apple may want to get into the content creation business to add value to iTunes or Apple Music or whatever, but it’s a tough business. Even Sling TV reports less than 3-million subscribers.
If Netflix can’t make money with 150-million subscribers, then how will Apple do the deed?
To see the math, just look at Apple Music vs. Spotify. Let’s say Apple Music has 60-million subscribers and the average monthly bill is $12. That’s $720-million a month in revenue, perhaps as much as $8-billion a year. Not too shabby, right? That’s a healthy chunk of Apple’s $10-billion quarterly revenue.
A close competitor to an Apple TV streaming television service– which more or less would resemble cable TV from 1999– is Google’s YouTubeTV which starts at $40 a month. Estimates put YouTubeTV at nearly a million subscribers and losing money fast. Even if Apple could offer a streaming television service at $40 a month, on average, a million subscribers would get it to $40-million a month, and barely half a billion a year.
That’s chump change.
We’ll have to guess, but Apple likely sold about 200-million iPhones in 2018, and with an average selling price of around $750, it brought in around $150-billion last year; or, just under $3-billion a week, or $12-billion a month. A few million subscribers to an Apple streaming television service is chump change, just like the 60-million or so Apple Music subscribers.
Of course, if you add up a bunch of chump change components then they can make a hefty revenue and profit stream. That’s what Services is. Hefty. With Google’s payment to keep its search engine on top in Safari, the App Stores, and so on. They add up to a hefty amount which grows as Apple’s customer base grows (about 100-million or so per year, according to Apple).
There won’t be much money in whatever streaming television service Apple brings to the customer base, but it won’t matter. All that chump change adds up and Wall Street seems to be in favor of Services, so all Apple is doing is adding to the pile.