Apple TV+ is still fairly new to the world, and Apple said its new subscription streaming video service has yet to impact the company’s earnings.
Apple executives didn’t offer much detail on Apple TV+, which launched on November 1, during Tuesday’s fiscal first-quarter earnings call. However, CFO Luca Maestri tempered early expectations for the service. He said right now Apple is tracking two components for Apple TV+ revenue: paid subscribers and Apple TV+ bundle subscribers, or people who bought an eligible Apple device and redeemed a free year of Apple TV+ service.
Maestri said Apple is deferring revenue for Apple TV+ bundle subscribers based on the value of the service that is being provided (about $60 for 12 months of Apple TV+), the number of customers that are eligible for the offer and the expected number of customers that will redeem the offer. The company is also making reductions for family sharing, for multiple device purchases and for geographic availability from its total eligible device sales.
“So, when you take the combination of paid subscribers and bundled subscribers, you get the Apple TV+ revenue,” said Maestri, according to a Seeking Alpha transcript. “Of course, because we’ve launched the service very recently, the amount of revenue that we recognized during the quarter was immaterial to our results.”
Ampere Analysis estimated Apple TV+’s subscriber count for the fourth quarter totaled 33.6 million, enough to make it the third-largest SVOD in the U.S. behind Netflix and Amazon Prime Video. However, the lack of significant revenue contribution suggests that the majority of Apple TV+ subscribers have taken up a free trial offered alongside new devices.
Apple TV+ costs $4.99 per month, but customers who purchase new iPhones, iPads or Apple TVs get one year of the service for free. Up to six family members can share one Apple TV+ subscription.
Despite the minimal contribution from Apple TV+, Apple said its service revenues totaled $12.7 billion, up 17% year over year.