Apple TV+ Pulling Back Spending Despite Emmy Nomination Success; What Can It Learn From Netflix?
Despite critical and awards success, Apple TV+ has yet to reach significant subscriber growth.
When it comes to critical and awards metrics, Apple TV+ has been an unqualified success since launching in 2019. However, when it comes to viewership and subscriptions, the jury is still decidedly out. Since its debut, Apple’s subscription streaming service has rallied around the motto of “quality over quantity,” and last week's Emmy nominations were a testament to that effort, as Apple TV+ took home 72 nominations, including ones in every major category. However, the streamer has spent heavily on those titles and has yet to see significant increases in subscriber totals. Therefore, the tech company’s executives are reportedly looking to shed its reputation as the biggest spender in streaming and rein in the costs of its pricey projects.
Key Details:
- Apple executives are reportedly working to rein in spending on original titles.
- The company spent over $500 million on three films that all underperformed at the box office.
- Apple TV+ earned 72 Emmy nominations last week, but changes must be made to sustain success.
From “Lessons in Chemistry” to “The Morning Show,” from “Slow Horses” to “Palm Royale,” Apple TV+ was one of the big winners on Emmy nomination day last week. The streamer pulled in its most nominations ever, finishing fourth behind Netflix (107), FX (93), and the combined HBO and Max (91), despite the fact that all of those outlets have much higher outputs than the still fledgling Apple platform. However, that critical success has not yet translated to profitable subscriber totals. While the traditionally tight-lipped tech company has not confirmed how many customers it has in its ranks, a 2023 projection from Statista estimates that it will have 44.1 million paid customers by the end of this year. Other estimates include both paid subscribers and those with access through various other Apple and third-party promotions, pushing the total higher.
Regardless of the actual number, Apple TV+ remains far behind its streaming rivals, and that is not sitting well with the company’s executives. Bloomberg's Lucas Shaw reports that Apple SVP for services Eddy Cue been working with studio chiefs Zack Van Amburg and Jamie Erlicht to tighten budgets and get their creative partners to spend more conservatively.
“Van Amburg and Erlicht have told some of their top creative partners that they want to change their reputation as the biggest spender in town,” Shaw wrote.
Over the past year, Apple spent over $500 million on “Argylle,” “Killers of the Flower Moon,” and “Napoleon.” At the box office, those films accounted for $474.6 million, meaning that they lost $25 before factoring in any marketing costs, which are generally estimated to be at least 50% of the cost of making the movie. Therefore, conservatively, it could be estimated that the films lost a combined $275 million.
Apple TV+ also reportedly spent $250 million on the World War II epic “Masters of the Air,” which, while it did earn three Emmy nominations (two for sound, one for theme music), barely made a blip in the Nielsen ratings. While research firm Kantar estimates that Apple TV+ saw more subscriber signups in the first quarter than any other service, Bloomberg Intelligence analysts Geetha Ranganathan and Kevin Near disagree.
“Subscriber growth has been weak,” they said in a recent note, “with the platform’s original content a fraction of what rivals offer.”
In recent months, Apple has begun looking for ways to change how it spends on shows and movies, and to bring in more content from outside sources to fill in the gaps between its limited original slate. Instead of its standard operating procedure of paying massive amounts of money to creators upfront, Apple has begun talking to its Hollywood partners about shifting to contracts that pay more on the backend and reward creators for titles that have success on the platform.
The service is also looking to beat back the criticism that it doesn’t have enough content to keep users engaged and signed up in between marquee originals by talking to major movie studios about licensing new content for its library. Other money-making options on the table for Apple TV+ is the long-discussed (and presumably planned for) addition of an ad-supported tier and bundling with Netflix and Peacock for Comcast's new StramSaver bundle.
The Streamable’s Take
There is no doubt that the economics of streaming have changed dramatically since Apple TV+ launched in 2019. Fueled in large part by the pandemic streaming boom and an increase in cord-cutting, to compete with larger services, Apple will need to adapt far more quickly than it has over the past five years. No longer are viewers willing to pay $9.99 per month for the right to have access to a service, especially if they are only being brought to the platform for occasional major releases.
Instead, they need to have regular new episodes to turn in for and a vast library of familiar content to watch in between. While Apple seemingly has an indefatigable mountain of cash to spend on streaming if it so chooses, that is not the way that the company operates. In order for Apple to have success in streaming, it needs to follow the lead of its biggest competitor, Netflix.
After leading the entire entertainment industry in spending, the streaming giant pulled back on its budget and focused less on big-budget, prestige awards bait, and instead on what the company’s director of content Bela Bajaria called “gourmet cheeseburgers”; well-made, but familiar titles. Netflix also continues to license titles from other studios in order to keep customers engaged with the platform even after they have binged through the new releases.
It appears now that Apple is beginning to take a page out of Netflix’s book, and in doing so, I hope that it can find a balance between what it has been doing and what the world’s largest streaming is doing. It would be a shame for viewers to lose quality shows like “Ted Lasso,” “Slow Horses,” and the like, but it would be even worse to lose Apple TV+ as a platform altogether.
Apple TV+
Apple TV+ is a subscription video streaming service for $9.99 a month that includes high-quality original shows and movies including Best Picture winner “CODA,” popular sitcom “Ted Lasso,” and dramas like “The Morning Show” and “Severance.” Apple TV+ is also home to MLB baseball games on Friday nights and MLS Season Pass. Apple TV+ can be added as a channel on Prime Video.