Apple’s best-ever $91.8 billion holiday quarter was definitely worth celebrating, but amid the many record results elsewhere on its balance sheet, company executives had little to say about one of its highest-profile new products, the streaming service TV+.
Oh, sure, CEO Tim Cook congratulated The Morning Show’s Jennifer Aniston for her Golden Globe win, and Billy Crudup for his (much-deserved) SAG Award. The Morning Show was the most prominent launch title when TV+ debuted Nov. 1, and the one critics complained most about while admitting they couldn’t stop watching.
The handful of launch titles since have been moderately reinforced with several more series, including Little America, which received a lot of love from critics, and the suspense thriller Truth Be Told, which did not. Cook promised “much more great content still to come.”
But when it came to TV+ details, like how many subscribers it has, or who’s watching what, Cook and CFO Luca Maestri were relatively mum. TV+ is “off to a rousing start,” Cook said, but details were scarce beyond that.
Overall, the company reported $12.7 billion, up 17 percent, in “Services,” the category that includes TV+. Apple Care, Apple Pay, the App Store, iCloud, and other subscription services.
In 2016, Apple set a goal of doubling revenue from its Services sector by 2020. On a “run-rate basis,” multiplying the quarter’s results across an entire year, Apple has reached that goal, Cook said. Now, with 520 million subscription accounts, Apple is extending another goal, to get 600 million Services subscribers by the end of 2020.
Amid all that good news, Cook and Maestri downplayed TV+’s impact so far on Apple’s bottom line, calling “the amount of revenue recognized … immaterial to our results.”
Cook also quashed an analyst’s question about the possibility of wrapping ads around the TV+ programming, as Comcast plans to do for two tiers of its Peacock service.
“I think it is possible to have advertising in a straightforward manner that doesn’t (impact) on people’s privacy,” Cook said. “For the TV+ business, we feel strongly that what the customer wants is an ad-free product. It’s not about our aversion to advertising, It’s what the customer wants.”
Despite Apple execs’ reticence, there are signs that TV+ programming is getting seen.
Ampere Analysis estimated last week that TV+ is already the No. 3 streamer, ahead of Disney+, which launched at about the same time, and behind Netflix and Amazon Prime. Ampere noted that most of TV+’s 33.6 million subscribers came by way of Apple’s decision to give a free year of the service to anyone who buys an iPhone, iPad or Mac.
While Ampere questioned how much those TV+ subscribers were actually watching, a separate report suggested many of its shows are getting a lot of audience interest.
In fact, said Parrot Analytics, six of the 10 most sought-after new streaming shows last quarter were on TV+.
Parrot’s list included Truth Be Told (No. 4), Servant (5), See (6), For All Mankind (7), Dickinson (9), and The Morning Show (10). That’s a heartening list for Apple, though it’s based on Parrot’s tracking of audience “demand” for a show in its first 30 days of release, rather than actual view data.
Behind the scenes, Apple reportedly is trying to close what was always the biggest hole in TV+,: a complete absence of library titles. Reports are that Apple and Netflix are both in conversation about buying MGM, which owns one of the biggest libraries still untethered to a major media company.
I formerly was an MGM executive, and know there’s lots to work with there: the James Bond, Rocky, Legally Blonde and Pink Panther franchises, 18 Oscar Best Picture winners, and 4,000 other films.
MGM also owns thousands of hours of TV programming, including The Handmaid’s Tale and The Outer Limits and Stargate franchises. It also owns Epix, the lower-tier premium channel that would bring additional programming rights and original shows, such as Godfather of Harlem with Forest Whitaker and the upcoming series War of the Worlds.
For probably a bit more than the $6 billion Apple already committed to original TV+ programming, an MGM acquisition would solve its library issues nicely, and put the company’s back catalog on par (or better) than all its service’s major streaming competitors.
Should the company close a deal for MGM, perhaps using some of its $207 billion in cash or even some of that $22.2 billion in net income last quarter for what would be one of its biggest-ever acquisitions, TV+ might become a truly scary competitor for all the other streamers out there.