Apple is reportedly losing $1 billion a year on its streaming service as churn levels increase
Apple's (AAPL) streaming platform is losing a reported $1 billion a year as the company faces stiff competition and a more choosy consumer.
According to a report in the Information, Apple — which just shed around $700 billion as a result of Wall Street's latest tech rout — consistently spent over $5 billion annually to beef up its content slate since launching in 2019. That number, though, dramatically decreased to just about $500 million last year, the report said.
Apple did not immediately respond to Yahoo Finance's request for comment.
The update comes as many media giants have pulled back on spending in favor of profitability. More streaming platforms are cracking down on password sharers and have also bundled their respective offerings to prevent churn or users abandoning their subscription plans.
Last year, Apple partnered with Netflix (NFLX) and Comcast's Peacock (CMCSA) to launch a new bundle dubbed StreamSaver, exclusively available to Comcast broadband internet service customers for a cost of $15 a month. The monthly price of a solo Apple TV+ subscription currently sits at $9.99, although users can bundle Apple's streaming service with other Apple-related products like Apple Arcade, Apple News+.
I's unclear the recent bundles are helping.
According to data compiled by subscription analytics platform Antenna, Apple's streaming service had the highest churn percentage of all the major streaming platforms, with the exclusion of Starz, with 7% of users churning out of the service during the month of February, compared to just 2% of users for Netflix and 4% of users for Disney+.
Notably, Apple has adopted a strategy different from those of its competitors. For one, its content slate is more limited, although it does boast highly acclaimed titles, including award-winning series like "Severance," "Shrinking," and "Ted Lasso." It was also the first streaming platform to take home an Oscar win for best picture (thanks to "Coda.")
In total, Apple TV+ productions have earned more than 2,500 nominations and 538 wins, CEO Tim Cook said on the company's January earnings call.
Apple TV+ does not release subscriber figures, although analysts have pegged total users anywhere from 30 million to 40 million. Compared to Netflix, which boasts over 300 million subscribers thanks to its substantial global presence, Apple TV+ does not have high penetration in emerging markets, which have become increasingly important drivers as streaming hits peak saturation levels in the US and Canada.
"Apple's streaming service never set out to be number one," Santosh Rao, head of research at Manhattan Venture Partners, previously told Yahoo Finance. "Apple is good at the game that they play, but it's not a mass appeal game. They want to be the creative storytellers. They're more focused."
In January, Apple reported first quarter earnings that showed all-time highs for services revenue, which includes sales from businesses like Apple TV+, along with the App Store and Apple Music. Revenue for the division climbed to $26.34 billion for the period compared to $23.12 billion in the prior year.
Alexandra Canal is a Senior Reporter at Yahoo Finance. Follow her on Twitter @allie_canal, LinkedIn, and email her at alexandra.canal@yahoofinance.com.
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