CEO: Apple Doesn’t ‘Make Purely Financial Decisions’ About Apple TV+ Content
CEO Tim Cook admitted on Apple’s quarterly earnings call that Apple TV+ isn’t looking for a financial payback on content investment because they “don’t make purely financial decisions about the content” on the service.
Cook added, “We try to find great content that has a reason for being. And we love shows like Ted Lasso and several of the other shows as well that have a reason for existing and may have a good message and may make people feel better at the end of it… I don’t view that we’ve narrowed our universe to the things we’re selecting from. There’s plenty to pick from out there. And I think that we’re doing a pretty good job of it as we speak.”
Apple has forked over millions on original content for its streaming platform. The Emmy-winning “Ted Lasso,” starring Jason Sudekis, for instance, is the biggest hit that Apple TV+ had in Q4 2021. Data from Parrot Analytics proves that “Ted Lasso” has been a driver of “demand share.”
And now that the second season is over, Kantar’s Entertainment on Demand panel suggests 19% of Apple TV+ users plan to cancel their subscription later in the quarter since “Ted Lasso” was the main reason for them signing up. This level of churn is a scary one for the tech giant because if they don’t come up with another one-hit-wonder soon they could be scrambling for subscribers. Indeed, Apple TV+ has the worst churn in the streaming industry.
Meanwhile, Cook boasted about the number of awards and nominations that Apple TV+’s programming slate has grabbed in the quarter, declining to speak about viewership or subscribers.
He said, “We don’t give out subscriber numbers for Apple TV+. What we do, do is give out a subscriber number for… the total number of subscriptions that we had. (785 million across all services.) And so we were incredibly pleased with that. That’s a huge growth on a year-over-year basis of 165 million. And it counts, as you recall, both Apple-branded and third-party. In terms of how we’re doing with TV+, we’ve been honored with 200 wins and 890 nominations. We’re doing exactly like we had wanted to, giving storytellers a place to tell original stories and feel really good about where we are competitively and strategic position of the product.”
Titles like “The Tragedy of Macbeth,” “CODA,” and “Swan Song,” as well as upcoming new series “Severance” and “The Afterparty” are highlights for the company. “Each one is a tremendous credit to all the storytellers in front of the cameras and behind them who touched audiences all over the world,” Cook remarked.
Although Apple does not break out subscriber numbers for the streaming service, the company said it had 785 million paying subscribers globally across all services (iCloud, Apple Music, etc.), up 27% YoY. That includes both Apple-branded and third-party services, such as subscriptions sold through the Apple App Store.
Apple’s Services segment, which includes the App Store, iCloud, and Apple TV Plus as well as music, news, games, fitness, payment, and other services, generated a record $19.5 billion in the year-end quarter, up 24% from the year-earlier period.
Also, Apple reached a Wall Street-beating record of $123.9 billion in sales for the last three months of 2021, even as the tech giant saw overall sales decrease in the period amid ongoing supply-chain constraints. For instance, in the September 2021 quarter, supply-chain issues including chip shortages added $6 billion in costs. However, executives didn’t provide an estimate of the financial impact for Q1 2022.
Cook’s comments are also an indicator that they still see the streaming service strategically as mainly a loss-leader for sales of iPhones, Apple TV 4K set-tops, among other products.
In July 2021, Apple ended previous promotional offers for customers who were getting to sample the service for free when buying a new Apple device. This means users probably decide the limited library isn’t worth $4.99 when that bill finally arrives.
The tech company had extended a one-year free offer a number of times for those who bought their new products. It currently offers Apple TV+ free for three months with the purchase of a new device.