Apple TV+ will be an important part of Apple’s growing services revenues going forward, but one analyst says the service is going to need a lot of subscribers to make much of an impact.
Cowen analyst Krish Sankar said the service, which is launching later this year, will need tens of millions of subscribers in its first few years. The analyst firm expects TV+ will reach 12 million subscribers in 2020 and 21 million in 2021, which would contribute between $0.11 and $0.32, respectively, to Apple’s earnings.
Apple will face lots of competition in its effort to build up a subscriber base for its video streaming service. Incumbent SVODs like Netflix, Amazon Prime Video and Hulu currently dominate the market and incoming services like Disney+ are expected to attract lots of new subscribers.
Of course, Apple has not yet revealed pricing for its service, making it difficult to predict for certain how Apple TV+ will impact its earnings.
Bloomberg earlier this week cited unnamed sources who said Apple is planning to launch its streaming video service in November and price it around $9.99 per month.
As Apple readies its streaming service for competition with stalwarts including Netflix and Hulu, the company is reportedly cranking up its content budget. According to the Financial Times, the company has thrown $6 billion at building out the content lineup for its service.
For its fiscal third quarter, Apple posted revenue of $53.8 billion, up 1% year over year, and said its service revenues reach an all-time high. For its fiscal fourth quarter, Apple is predicting revenue between $61 billion and $64 billion.