As Apple TV+’s subscriber base continues to grow and the streamer enjoys lots of attention on Friday’s Severance season 2 finale, a new report Thursday suggests the streaming service remains a financial loser for the iPhone giant — to the tune of $1 billion in losses annually. And yet it should come as no surprise Apple TV+ bleeds money.
A fat billion a year in the red sounds bad, but it’s pretty much in line with the plan for losses of up to $20 billion over a decade for the still-nascent streaming service.
Apple TV+ loses money: Streaming success vs. financial reality
Launched in 2019, Apple TV+ gives subscribers access to an ever-growing catalog of exclusive TV shows and movies. Still, that catalog remains quite small relative to other streaming services. Apple consistently ranks high when it comes to quality over quantity, but that focus isn’t necessarily paying off — at least in the short term.
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Despite reaching about 45 million subscribers last year, Apple TV+ remains the only unprofitable service in Apple’s expanding services portfolio, according to The Information. The report indicates Apple invested more than $5 billion annually on content since the service’s 2019 launch. But subsequent pressure from CEO Tim Cook and other executives reportedly trimmed that budget by $500 million in 2024.
This financial scrutiny appears to have intensified in recent years. The Information reports that Cook personally questioned several movie deals, including the spy action-comedy Argylle starring Henry Cavill and Dua Lipa. The $200 million production apparently drew Cook’s criticism for failing to attract a significant audience or generate substantial new subscribers.
Apple’s streaming service continues to represent a small fraction of the U.S. streaming market, accounting for less than 1% of total viewing time. By comparison, Netflix and Amazon captured 8.2% and 3.5% of total viewing time in February, respectively.
Part of a larger strategy
Despite these worrisome figures, Apple’s initial business plan for the streaming service anticipated losses between $15 billion and $20 billion over its first decade. Such losses are not unusual in the streaming industry, though they represent a departure from Apple’s typically disciplined fiscal approach.
Services chief Eddy Cue initially sheltered Apple TV+ executives from budget scrutiny. He even rejected proposals for increased oversight of programming costs. However, following successes like CODA winning the Oscar for Best Picture, Cook reportedly began more closely monitoring the service’s financial performance starting in 2022.
One area that faced particular scrutiny was the use of private jets for talent, which reportedly cost hundreds of thousands of dollars per flight. This scrutiny led Apple to seek better deals with flight-chartering companies.
Broader services challenges
The report suggests Apple’s services division faces wider challenges beyond Apple TV+. Despite services being Apple’s fastest-growing and most profitable category — with gross margins exceeding 75%, compared to just under 40% for hardware — several offerings appear to struggle.
For example, Apple Music reportedly saw growth stagnate recently. It remains “only marginally profitable,” with single-digit-percentage gross margins, because Apple pays more than 70% of revenue to artists and labels. Cue reportedly expressed doubts privately about the service ever reaching 100 million paying subscribers.
The report suggests Apple News+, Apple Fitness+ and Apple Arcade struggle, too. Apple Arcade reportedly had only 2 million users during its first year, with roughly 25% on free trials, while News+ purportedly has monthly active users in the “low single-digit millions.” (Other reports showed fast growth for Apple’s news aggregation service.) In addition, Apple Books and Apple News+ reportedly faced layoffs in 2024 due to weak performance.
The Apple One effect
The reports revealed another interesting factor: Apple One bundles might mask the performance of individual services. Many subscribers apparently choose Apple One primarily for iCloud+ storage, not for the other included services. The report suggests that without Apple One, services like Apple Arcade and Fitness+ might fall short of profitability.
But despite these challenges, Apple’s astronomical corporate profits easily absorb streaming service losses. Last quarter alone, Apple reported $124 billion in revenue with $36 billion in profit, putting the annual $1 billion Apple TV+ loss in perspective.
Numbers don’t reflect Severance boost
As Severance concludes its critically acclaimed second season, the show’s success might help boost subscriber numbers beyond the reported 45 million. A recent Antenna report suggested Apple TV+ added 2 million new subscribers in a single month during this period. That substantial growth could help improve the service’s financial outlook.
For Apple users invested in the company’s growing services ecosystem, the report highlights the challenges of building sustainable subscription services — even for one of the world’s most valuable companies.
Get Apple TV+
Apple TV+ is available by subscription for $9.99 with a seven-day free trial. You can also get it via any tier of the Apple One subscription bundle. Customers who buy a new iPhone, iPad, Apple TV, Mac or iPod touch can enjoy three months of Apple TV+ for free.
After launching in November 2019, “Apple TV+ became the first all-original streaming service to launch around the world, and has premiered more original hits and received more award recognitions faster than any other streaming service. To date, Apple Original films, documentaries and series have been honored with 471 wins and 2,090 award nominations and counting,” the service said.
Apple TV+ is home to more than 200 exclusive movies and TV shows (including breakout soccer comedy Ted Lasso). The service also offers documentaries, dramas, comedies, kids shows and more.