In three years’ time, Apple could bring in an extra $10 to $12 billion in annual revenue through its original video content and Apple Music, analyst Amit Daryanani of RBC Capital Markets argued in a note to clients this week.
In terms of Apple’s share price, that would add up to 75 cents to the company’s earnings per share.
While it’s just a prediction, it’s interesting because original content is often viewed as something likely to be a money loser for Apple — with the long term goal of pulling more users into the Apple ecosystem. The idea that it could, in fact, be a profitable money maker on its own would be a pretty massive win on Apple’s part.
Spotify, for instance, is the world’s leading streaming music subscription service, but has yet to turn a profit despite having significantly more users than Apple.
Apple’s original video ambitions
Apple is expected to spend upwards of $1 billion on video this year, although other reports have suggested that it will blow past this number.
It has so far signed close to 20 different TV shows into development — in addition to the non-scripted series such as Carpool Karaoke and Planet of the Apps the company has already released. While many of these have been in the drama or comedy categories, Apple has also ventured into content including documentaries, music videos, a possible animated feature film, and an experimental remake of a French short story series.
Amit Daryanani’s figures are based on the idea that Apple Music will be able to assemble 100 million or more paying Apple customers in the next three years. At present, Apple has around 50 million subscribers, and the service appears to be growing quickly.
One wildcard that Daryanani doesn’t raise in detail is the fact that Apple has yet to reveal exactly how it will be distributing its original content. Popular theories range from giving them away via Apple’s TV app to launching its own Netflix-style streaming subscription service. Personally, I think it would make a lot of sense for Apple to bundle its original video with Apple Music for an Amazon Prime-style super subscription service.
Are you excited about Apple’s original video content? Let us know your thoughts in the comments below.