Apple's Streaming Service Loses $1 Billion Annually

Apple TV Plus is reportedly incurring losses of over $1 billion annually, even as it boasts approximately 45 million subscribers as of 2024. This alarming figure positions Apple TV Plus as the only subscription service from Apple that fails to generate profit.

In response to these ongoing financial challenges, Apple has implemented a significant reduction in its content budget, cutting it from $5 billion to about $4.5 billion for the past year. Despite producing acclaimed original series like "Severance" and "Ted Lasso," Apple TV Plus captures less than 1% of the total monthly streaming viewership, a stark contrast to Netflix's 8.2% share, as per Nielsen data.

The strategic intent behind Apple TV Plus seems to be to enhance customer retention within the Apple ecosystem. During a recent interview, Netflix co-CEO Ted Sarandos remarked on this approach, suggesting that while he finds it puzzling, it may reflect a deeper strategy by Apple.

Apple's broader services segment, which also includes iCloud, Apple Music, and other offerings, generates billions annually, yet many services, including Apple News Plus and Apple Arcade, face low usage and profitability challenges. Analysts noted that if these services were not bundled under the popular Apple One package, primarily purchased for iCloud, they might struggle to remain viable.

As the competition in the streaming landscape intensifies, media companies are increasingly offering bundled services to attract budget-conscious consumers, further complicating the position of Apple TV Plus within the market.