Did you know that Apple TV+ makes losses every year? It is the only major Apple subscription service that operates at a loss, dropping over $1 billion annually. A recent X post by an entrepreneur named Aakash Gupta touches upon the math.
At its peak, Apple was spending upwards of $5 billion a year on original content alone. The internal business plan drafted before its 2019 launch explicitly budgeted for losses between $15 billion and $20 billion across the service's first decade. From an accounting perspective, the current $1 billion annual loss means they are actually pacing exactly where they planned to be. Despite acclaimed shows such as Severance, Ted Lasso, and The Morning Show, Apple TV+ reportedly accounts for less than 1% of US streaming viewership, far behind competitors like Netflix and Prime Video. It currently has around 45 million subscribers.
Apple TV+ functions primarily as a "loss leader." The streaming service doesn't want to beat Netflix or Prime Video. It wants to build a "prestige culture brand that keeps consumers trapped in the broader iOS ecosystem, driving hardware upgrades and Apple One bundle renewals". Other Apple services like iCloud+, the App Store, and Apple Music have massive gross margins (exceeding 75%), which easily absorb the streaming deficits.
