Apple’s video offerings could soon rival the biggest streaming service in the game, according to analysts at Morgan Stanley.
Katy Huberty, who has a reputation as one of the best Apple analysts in the industry, thinks video services will be a huge driver of growth for Apple over the next few years. The company’s potential is so huge that Huberty predicts it will rival Netflix by 2025.
In a note to investors, Huberty and her colleagues raised the target price for Apple shares from $232 to $245. The stock currently trades around $228 per share.
Apple’s growing video empire
Original video content is one of the major reasons why Morgan Stanley believes Apple’s stock price will continue to climb. By offering a stand-alone streaming service that’s cheaper than Netflix, Apple could bring in billions of dollars in extra revenue per year.
“We forecast that an Apple Video streaming service with high quality but limited breadth could be priced at the low end vs. competitors, or $7.99/month, and reach over 50M paid subscribers by 2025, compared to 124M at Netflix (current paid streaming subs) and Apple’s >650M unit iPhone installed base,” Huberty writes. “This would imply that stand-alone Apple Video can grow from a ~$500M business in CY19 to a $4.4B business in just six years.”
Apple plans to spend $1 billion on original TV shows and movies this year. The company’s growing roster of shows boasts some of the biggest names in Hollywood.
Another scenario for Apple’s TV service is that it could be bundled with Apple Music under one subscription. If that happens, Morgan Stanley expects video and music to become a $22 billion business by 2025. That would make it the size of Netflix and Spotify combined.