But the hype around them has waned as they grapple for attention with other prominent digital entertainment services.
But if Apple wants to maximize the potential of its services business, it will have to make them more appealing to the hundreds of millions of people who buy its gadgets.
“To me, (digital services are) still complementary to the bigger picture,” said Dan Morgan, senior portfolio manager at Synovus Trust Company. “Apple is still an engineering company, they still need to come out with new products, and the hardware is going to drive growth.”
How have Apple’s entertainment services performed?
But since then, Apple TV+ has struggled to keep pace with the deep bench of content available from other players in the space.
“They’ve not entered the market with such a big splash, like Disney+ did with ‘Madalorian,'” said Zak Shaikh, vice president of consulting for global media and entertainment with Magid. “They’ve got to build greater volume … ‘The Morning Show’ garnered a lot of critical acclaim. But it’s not just about having that one, big splashy show that gets nominated, it’s about the volume.”
Its relatively small content library is likely due at least in part to the fact that Apple has spent a fraction of what bigger competitors like Netflix invest in creating exclusive content, analysts say; although, as one of the world’s biggest companies, Apple could choose to shell out more.
“I don’t think it matters as much whether in this first year that they’ve broken any records,” Shaikh said. “They’re definitely going for high-quality, and high-quality global (content). You’ll start to see the fruits of that in a couple of years. As long as they survive… Not every service is going to survive the next five years because there’s too many options.”
At $4.99 a month, Apple TV+ is cheaper than many other streaming services, which is a selling point. But for Apple to maintain subscribers long-term, especially after its “free year” offer ends, it will likely need more content. Apple has not released Apple TV+ subscriber numbers, and did not respond to a request for comment about the platform’s performance.
Shaikh said his firm’s research indicates that Netflix, Hulu and Disney+ are the three most well-liked streaming services among Americans, with Apple TV+ and HBO Max grappling for the fourth slot. That could be a tricky spot to be in, given that people are unlikely to subscribe to every streaming service out there.
“Even though it’s priced less than Disney and Netflix and a lot less than HBO, I think the future of Apple TV+ is only going to be as a giveaway to Apple hardware,” said Jeffrey Cole, CEO of the Center for the Digital Future at USC Annenberg. “I don’t think it’s going to earn very many subscribers on its own, it doesn’t offer enough to compete with Disney and Netflix.”
Cole added that he thinks the “best case” for Apple TV+ is that customers will pay for a subscription for a month or two to watch certain shows or movies, end their subscriptions, but then sign up again for another month when new exclusive content is released.
Many of Apple’s other subscription services face similarly steep competition.
“They’re kind of like, ‘We’ve got our hands in everything.’ But what’s your focus?” Morgan said, adding that he hopes the focus will remain on making standout hardware products. “If they can continue growing their user base with their great engineering, then the services fold in, and you get that halo effect.”