jingzhang
Apple TV’s monthly subscription price has risen from 4.99 to 6.99, then to 9.99 in just three years, and reached 12.99 in August this year—an astonishing increase of 117%. As a result, users have been calling on Apple to follow in the footsteps of Netflix and Disney+ by launching an ad-supported subscription plan for Apple TV.
Recently, Eddy Cue, Apple’s Senior Vice President of Internet Software and Services, responded directly to rumors about ads on Apple TV in an interview with Screen International magazine, confirming that there are currently “no plans” to introduce an ad-supported streaming subscription service. He stated, “Not at the moment. Again, I don’t want to say ‘never’ forever, but there really are no plans right now.”
In a sense, in the context of the internet, matters that officials neither confirm nor deny are often either already happening or about to happen—and Apple TV actually needs ads too. A month ago, Eddy Cue made his first clear response to rumors about the size of Apple TV’s subscriber base. Regarding industry analysts’ previous estimate of approximately 45 million subscribers, he bluntly stated that the actual number of subscribers was “significantly higher than that figure.”
Since its launch in 2019, Apple TV has gained a user base of well over 45 million in six years—a result that seems less than impressive. Even setting aside Netflix’s 300 million users, Disney+, which also launched in 2019, surpassed 100 million users in just two years. Moreover, Disney+ did not offer a free one-year subscription at launch like Apple TV did, yet Apple TV frequently provides free subscription periods to users of Apple devices.
Apple’s predicament in the streaming sector stems from its lack of historical accumulation. Unlike Netflix, which started with video rentals in the late 1990s, Disney+, HBO Max, and Prime Video have the backing of Disney, Warner Bros., and MGM respectively. This has forced Apple TV to adopt a “small but refined” content strategy. To make Apple TV an instant hit, Apple spent over $6 billion in just two years and even established a dedicated 40-person original content production team called “Apple Worldwide Video.”
“We don’t care about quantity; we want to create the finest drama content”—this was Apple TV’s promotional slogan at the time. Despite massive investments in original content, Apple TV’s CODA won the Academy Award for Best Picture in 2022; in 2023, Killers of the Flower Moon and Napoleon received 13 Academy Award nominations, and Ted Lasso took home the Emmy Award for Outstanding Comedy Series. This year, the original film F1: Drive to Survive became a phenomenal hit, grossing $630 million worldwide.
However, Apple TV’s strength in “small but refined” content is also its weakness. Despite heavy investments in original content, Apple TV does not offer content rentals nor air content for which other companies hold distribution rights. As a result, its content library is far from being “extensive” when compared to competitors like Netflix and Disney+. To address this, Apple TV plans to achieve an update frequency of nearly “one original work per week” by 2026—but this will inevitably lead Apple’s spending on self-produced content to exceed its current annual level of $4 billion in the future.
Such an astonishing level of spending is clearly mismatched with its tens of millions of users. According to reports from overseas tech media The Information, Apple TV’s losses in 2024 may have exceeded $1 billion, making it the only subscription service under Apple that has not yet become profitable. Yet it is important to note that Apple’s services business—once regarded as its future—are now also facing challenges.
Except for iCloud Plus and search advertising, other segments of Apple’s services business each face their own difficulties. For instance, Apple Music’s growth has been sluggish; the usage rates of Apple News Plus, Fitness Plus, and Apple Arcade have been on the decline; and the “Apple Tax”—a core part of its services revenue—has faced challenges in the European Union, Japan, South Korea, and even the United States itself.
While Apple does have a large cash reserve on hand, the key question is: how long will it tolerate Apple TV’s losses? If Apple intends to maintain the status quo—using Apple TV as a tool to enhance the appeal of its hardware products and strengthen user stickiness to the Apple ecosystem—then Apple TV’s losses can be seen as a trade-off where gains in one area offset losses in another.
But if Apple ever views Apple TV as a pure streaming service, then launching an ad-supported subscription plan will become imperative. After all, Apple’s search advertising has already proven that its high-net-worth user base holds extremely high value.
