Outside of excited Apple executives, no one thought much of Apple TV Plus. Even with $6 billion allocated for content and a roster of talent that included J.J. Abrams, Reese Witherspoon, and Oprah Winfrey, little on Apple TV Plus shined at launch. With the exception of The Morning Show, Apple TV Plus barely managed to enter the conversation, while other new entrants like Disney Plus soared right out the gate.
But streaming isn’t a sprint; it’s a marathon. The anniversary of Apple TV Plus arrives with the platform getting better each month, but it’s still not where Apple needs it to be.
It’s impossible to ignore the most obvious flailing that Apple TV Plus is facing: there’s no back catalog to keep people around once they’ve finished watching the 31 TV series and handfuls of movies currently on the platform. To compare, Apple TV Plus has 400 times less movies than Netflix, and very few of those movies on Apple TV Plus are must-watch programming. The Morning Show, Ted Lasso, and Mythic Quest are a few exceptions, but that’s hardly enough to ask people to spend $5 a month — and so Apple hasn’t, giving the majority of its subscribers the ability to stream over the last 12 months for free.
It’s an issue that even Apple is keenly aware of. The company extended its free trial period by another three months, giving those who signed up last November when Apple TV Plus debuted until the end of January. Apple TV Plus is also the “only service that sources the majority of its subscribers from promotions,” according to analyst Michael Nathanson. Even worse, 29 percent of Apple TV Plus subscribers have no plan to renew once they have to spend $5. Apple TV Plus is facing one of the largest churn percentages (17 percent) out of all the major streamers, according to a poll from HarrisX. Nathanson wrote that his team remains concerned about Apple TV Plus, adding that the streamer is “in danger of losing momentum if they are not able to entice renewals with exciting original content in the coming months.”
Like other companies, Apple isn’t immune to issues caused by the pandemic. Production on films and series were forced to shut down. While Apple was able to buy some movies from studios looking to generate any form of revenue, Apple TV Plus didn’t become the go-to streaming platform. By Apple TV Plus’ six-month mark, smack dab in the middle of the pandemic, most analysts walked away with the same note: things weren’t looking stellar for Apple. Media mogul Barry Diller told NBC’s Dylan Byers that Apple’s “still not in it with both feet.”
One year in, I would argue Apple is in it, but the company’s work is only just beginning. Apple TV Plus’ role is becoming increasingly clear as a driver in helping to sell the company’s new Apple One bundle, collecting services like Apple Music, Apple TV Plus, Apple Arcade, and more into one plan. Apple TV Plus doesn’t need to be Netflix to help Apple achieve its primary goal of creating a services ecosystem that is just tantalizing enough for people to pay for a bundle and get locked into Apple’s universe. See: Amazon. It does need to actually entice people, though.
Apple isn’t selling as many iPhones or devices as it once was; creating a service-based ecosystem that drives revenue every single month is where Apple is pouring its investments. Last quarter, Apple reported a record-high $13.3 billion revenue from its services division, close to $2 billion more than the year before. CEO Tim Cook also hasn’t shied away from noting how important Apple’s services division is. The company first started pivoting to focusing on software in 2015 after iPhone growth slowed, and since then, services have thrived.
Cook and his company have investors’ attention with the pivot. They also have consumers’ curiosity. What they still need is people’s dollars. In order for Apple TV Plus to be an option, even as part of a bundle that brings people in, Apple TV Plus has to actually offer something worth buying. It currently doesn’t (hence the extended free trial), but it is slowly getting there. Shows like Ted Lasso, which was renewed for a third season before its second even premiered, help.
Apple has also started to change its strategy slightly, picking up shows that it wants to reboot or continue — and with it, their entire libraries. Originals aren’t enough. Apple needs a catalog of titles to keep people streaming. As AT&T CEO John Stankey said about HBO Max on his company’s recent earnings call, it’s original titles that lead to customer acquisition, but strong libraries that will keep them streaming.
So, is Apple TV Plus a complete dud? It certainly hasn’t seen the success that Disney Plus has, but Apple doesn’t need the biggest streaming service in the world. It just needs to have enough new content, consistently, to make people feel all right spending $5 a month — or, as Apple would likely prefer, buying a bundle plan. It’s fitting that Apple TV Plus’ first year was mostly free, giving curious passersby the opportunity to see if Apple could pull it off. It was a trial period for Apple, too.
The biggest advantage that Apple has is, well, it’s Apple. The company is worth more than $2 trillion and is sitting on a ludicrous amount of cash. That doesn’t always translate into the best environment for creatives, however. Amazon has limitless resources and has struggled with its own gaming ambitions, for example. But Apple could fund TV Plus as a fun side project that lets Cook sit with celebrities at the Oscars and never worry about going into the red. The capital allows Apple to continuously invest in projects without worrying about whether Apple TV Plus will ever break even.
Plus, Cook and his team have made it clear that building out its services offerings, and generating tens of billions of dollars in revenue every year through apps that keep people coming back, is of the utmost importance. As Diller told NBC, Apple tentatively dipped a toe into the game last November. It has all of the power, influence, and capabilities to become a cultural force, but executives have yet to cannonball into the deep end. The time has come to take a deep breath and dive.
