Morgan Stanley thinks Apple TV+ could have 136 million subs by 2025


Apple TV+ could have 26 million paying subs by 2025; 2.6 million currently
Can Apple get 1 in 10 of its users to sign up?
Photo: Apple

Apple TV+ hasn’t even launched yet, but already investment gurus are seeing cartoon-style dollar signs in their eyes.

According to Morgan Stanley analysts, Apple TV+ could be a $9 billion-per-year business by 2025. That’s a whole lot of $4.99 sign-ups!

Morgan Stanley analyst Katy Huberty is basing her figures on the prospect that 1 in 10 Apple users is willing to sign up to the streaming service. By Huberty’s estimates that would be 136 million paid users.

By comparison, Apple Music hit around 60 million users this summer. Apple Music launched four years ago in June 2015. Netflix, as a competing video subscription service, currently has 151 million paid subscribers worldwide. Those figures suggest that 136 million users isn’t a totally unreachable number, especially five years from now.

In a note to clients, Huberty wrote that:

“With an attractive price point at $4.99/month, and wide initial distribution to the Apple installed base via the bundled free year offer, we estimate Apple TV+ can become a $9B revenue business with 136M paid subscribers by FY25, assuming just 1 in every 10 Apple user pays for the Service by FY25.”

Challenges Apple TV+ faces

As I see it, there are a few challenges — or at least things to consider — as Apple moves forward. The first is that, despite potentially bringing in this much money, it wouldn’t necessarily make Apple TV+ an enormous profit spinner. Apple has already spent upwards of $1 billion on original TV shows. Despite this, it will be launching with a smaller slate of shows than rivals like Netflix and Disney+.

Getting into streaming content isn’t just about a big upfront cost in year one. Apple will have to continue making new shows and acquiring other content to make its service appealing. That will significantly eat into costs — especially if Apple keeps throwing its cash around in a big, bad way.

The second issue is potential streaming service fatigue. No, I don’t think that people will cap their subscriptions at one service per month. But with everyone under the sun launching their own monthly subscription service it seems likely that, at some point, there will be streaming fatigue. Apple has an advantage by being able to actively market to its user base. However, this is a competitive area. And it’s about to get even more.

The final point is the issue of Apple’s free subscription. Right now, Apple is giving away one year of Apple TV+ subscription to people who buy a new device. That’s great as an added extra to drive hardware sales. But it may eat into the number of potential paying customers. The most loyal group of Apple fans are probably the ones who will subscribe first to Apple TV+. But they’re also the ones most likely to buy a new device and therefore qualify for a free subscription.

Is Morgan Stanley right about Apple TV+?

How do you predict Apple TV+ will work out for Apple? Are you planning to subscribe in November? Let us know your thoughts in the comments below.

Source: CNBC


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