Posted on: 2/3/2023

Does Apple+ Stand a Chance at Winning the Subscription Streaming Game?


While other streaming platforms are scaling back, Apple+ continues bold spending on content.

Subscription-led television and film content streaming has become a major part of the entertainment industry, and one trend that has emerged is the use of exclusive content to attract and retain subscribers. These exclusive shows have proved to be a major draw for subscribers, and companies have continued to invest in more original content to keep viewers engaged.

Many of them focused on big-budget productions to create a cinematic experience for viewers, with great production value and high-quality visual effects. Many of them have also acquired high-quality content from third parties, for example Netflix’s rights-acquisition of popular shows such as Friends or The Office, and Disney+ leaning heavily on their Star Wars, Marvel and Twentieth Century Fox back catalogues to offer viewers a variety of content.

A year ago, it seemed as though every article regarding content investment revered the high-spend model as an evergreen idea. However just 12 months later, the story is very different. According to the Financial Times, the cost-of-living crisis and plummeting share prices triggered a $500 billion market decrease across the big media players. This was perhaps triggered by Netflix’s first subscriber loss in over a decade (and the ensuing layoffs and dramatic 60% stock plunge), or Warner Bros Discovery’s David Zaslav gutting the HBO acquisitions team, or Bob Iger’s reinstatement at Disney with a rumoured brief to restore order to their stock price and content expenditure.

However, bucking this cost-cutting trend is Apple who, having so far avoided the tech crash that has hit so many of its Silicon Valley neighbours, is increasing content spend while so many of its rivals are cutting it. Apple TV+ is now three years old, and since it was launched as part of a wider strategy to pivot to subscription – thereby leveraging the 1.2 billion iPhone users – it remains to be seen if this stratagem has been successful. So far, the results have been ambiguous to say the least. Despite being launched in the same month as Disney+, Apple TV+ has far fewer subscribers even though it is one of the cheapest ad-free streamers in the market and resonates low in consumer preference surveys (Enders), with limited viewership.

This poor performance is surprising given the massive consumer incentives Apple has offered, including free subscriptions to Apple TV+ with certain Apple product purchases –for instance the 140 million iPhones sold in Europe and the US in 2021! A recent report by London-based research firm, Enders Analysis, found that consumers who sign up to Apple TV+ are generally heavy video consumers (rather than niche audiences) and are already subscribing to many rival services: in the UK, as of Q3 2022, 93% of Apple TV+ homes also had Netflix, 86% had Amazon Prime, 62% had Disney+, and 61% had Sky.

It remains to be seen if Apple has built enough subscription momentum within their device buyers, and how many subscribers will continue their Apple TV+ subscription past the end of the free trial, however big-budget original content could be the way to speed this up. To date, Apple’s strategy regarding scripted content has been quality over quantity. Their library is still just a fraction of the size of their competitors’, and it features little non-English or ‘non-brand-safe’ material.

Apple, however, are doubling down and using their unparalleled financial resources to try and rectify the situation. Having more cash in the bank than the average country, with a circa $2 trillion valuation as of Jan 2023, and net income in 2022 of $99.8 billion (Statista), it has often been said that whatever industry or medium Apple turns its attention to, should concern its would-be competitors as it has all the resources to throw at the matter. For the moment, this would appear to be the world of content. Enders reports that in 2022, Apple spent $8 billion on content, which although it was the smallest investment of all the streamers, it is also the fastest growing – and was a four-fold increase from 2019.

Despite this slow start, Apple TV+ does appear to be hitting its stride. Apple Originals have star talent and are gaining increased awards recognition: to date, Apple Original films, documentaries, and series have earned 280 wins and 1,201 award nominations and counting, including the multi-Emmy Award-winning comedy Ted Lasso and this year’s Oscar Best Picture winner CODA. They are slowly but surely expanding their portfolio with quality new shows – as evidenced by their being the only major content provider with a steady rise in Emmy nominations – like SeveranceThe AfterpartySlow HorsesWe Crashed, and Pachinko, to add to returners Ted LassoMythic Quest, and The Morning Show.

Enders’ analysts stated that “Apple’s share of expenditure is likely to increase as major rivals like Disney, Netflix and Warner Bros. announce flat or decreasing spending while Apple ramps up spending on sports,”. In the US, Apple have made big inroads in sports rights, acquiring MLS (US football league) and MLB (baseball) rights and announcing a desire to “partner with leagues” going forward. This may likely become a strategy they will look to replicate in Europe. More recently, they have also started to expand their library with third party licensed content, themed with, and tied to, the launch of their Originals.

Ultimately, streaming isn’t going anywhere. Billions are still being deployed on content, and the name of the game is international expansion. Nonetheless, wary media leaders are now focused on shareholder value as opposed to subscriber growth at all costs. Apple, perhaps due to its slow acceleration from the starting blocks, appears to be focusing more on the latter – and it remains to be seen if their focus on quality over quantity and thoughtful IP acquisitions will lead to a different outcome.


Tora Squire