Apple is apparently losing more than $1 billion a year on its Apple TV+ service, but this could all be part of a larger plan.
Per The Information, Apple TV+ is the only Apple subscription service that is not profitable. While its subscriptions grew to around 45 million last year, the company is still losing more than $1 billion annually. Apple has spent more than $5 billion a year on content since the service launched in 2019, but this was reduced by $500 million in 2024 in response to a push for cutbacks from Apple CEO Tim Cook and other executives.
Cook apparently questioned several forthcoming movie deals with Apple TV+ executives in 2024, including for the spy action-comedy film “Argylle.” The movie stars Henry Cavill and Dua Lipa, and cost $200 million to produce. Cook is said to have complained that the movie had not found a significant audience or generated additioanl subscribers for the service.
Apple’s initial business plan for Apple TV+ predicted losses of between $15 billion and $20 billion over its first decade. While major losses are normal within the streaming industry, this also represents a major departure from Apple’s normal financial discipine.
Despite succeses such as “CODA” winnin the Best Picture Oscar, Cook has begun closely scrutinizing Apple TV+’s financial performance since 2022 and called for more oversight. The use of private jet travel for stars at the cost of hundreds of thousands of dollars per flight came under particular scrutiny and led Apple to ask executives to negotiate better deals with flight-chartering companies.
As far as Apple’s financial breakdown is concerned, Services is Apple’s fastest and most profitable category, with gross margins exceeding 75 percent, compared to just under 40 percent for hardware. In its most recent fiscal year, services revenue rose 13 percent to more than $96 billion. However, other than iCloud+, Apple’s other services are said to be in poor health.
Stay tuned for additinal details as they become available.
Via MacRumors and The Informant