(AAPL) Apple TV+ Has a Big Problem

Jun 04, 2022

When Apple Inc. (AAPL) debuted Apple TV+ in 2019, it wasn’t about launching just another streaming service — it was a way to sell more Apple products.

When customers bought a new iPhone, iPad, Apple TV device, or Mac, Apple handed out a free year of Apple TV+.

But historically speaking, Apple has been guarded when it comes to subscription numbers, and today, we are going to take a look at how the streaming segment is performing.

Because if the streaming service isn’t performing well, it’s not going to be an incentive for someone to buy a new Apple product.

According to Statista, paid subscribers of Apple TV+ are estimated to be around 25 million; a further 50 million have access to the platform via promotions.

For context, Netflix has around 222 million subscribers, while Disney+ has 137.7 million subscribers.

So is Apple in the running to grow its numbers and compete with the larger streaming services?

According to LikeFolio data, user growth is continuing to slip.

Consumer mentions of signing up for an Apple TV+ account (or purchasing a device) have slipped by 20% YoY. *

*Due to the nature of brand naming, it’s difficult to discern between device and streaming usage.

This decline in demand across the board is congruent with macro streaming trends. In fact, streaming mentions (think eyeballs on screens that aren’t traditional cable) remain significantly lower versus pandemic levels.

While time spent streaming tempers, the number of streaming options for consumers is larger than ever.

And viewers are feeling the burn with all of these choices. Subscription fatigue mentions are 44% higher on a YoY basis.

This spells trouble… especially if you’re Apple TV+.

In fact, consumer mentions of canceling Apple TV+ are on track to close at all-time highs, trending +89% QoQ and an enormous +212% YoY.

Translation: Customer churn for the subscription service is likely elevated.

What can Apple do to stop the rot?

Based on qualitative analysis of cancellation mentions since March, Apple TV+ needs more Ted Lassos.

Quality content is the obvious answer, but as Netflix has shown, throwing tons of money into content in an attempt to see what works isn’t always best, and Apple doesn’t have a beloved content library to compete with Disney+.

But maybe there is another way…

Back in January, Wedbush analyst Dan Ives said Apple is “ready to spend billions” on live sports content deals over the next four years.

“We believe the company is gearing up to bid on a number of upcoming sports packages coming up for contract/renewals in future years,” the analyst said.

And it seems he’s right, with the streaming service having already secured a deal to bring Major League Baseball’s “Friday Night Baseball” games to its platform.

Bottom Line: From the outside looking in, it looks like Apple’s subscription service has somewhat stalled with a lack of quality content on the platform.

However, changing pace and focusing on sports streaming may see previous subscribers leave and new subscribers stick around. This will be essential to support the streaming arm of Apple’s ever-growing ecosystem.

Andy Swan
Founder, LikeFolio