Apple Inc. just raised the price of Apple TV+, which one analyst sees as a proof point of the service’s “quiet success” since its 2019 launch.
Apple TV+ doesn’t get as much attention as Netflix and Disney+, in part because the service has a much smaller library of programming. But even with the monthly price of Apple TV+ now at $6.99, up from $4.99, Apple’s
service remains cheaper than the least expensive ad-free plans from Netflix Inc.
and Walt Disney Co.
A new ad-supported Netflix plan that launches next month will also cost $6.99.
That price increase speaks positively about what Apple has been able to do in media, according to Evercore ISI analyst Amit Daryanani. The move “adds to our conviction that Apple is organically building a best-in-class premium streaming service,” he wrote in a note to clients Monday.
“The increase follows similar moves by other streams and provides support that Apple is organically building the next HBO,” he continued. In his view, Apple has the potential to “become far more competitive in terms of available content as long as they can maintain their impressive hit rate” over the next three to five years.
He sees the price increase as “thoughtfully timed,” since the company just put out the second season of “Acapulco” and is expected to debut new seasons of fan favorites like “Ted Lasso” and “Severance” in the next few quarters.
Apple doesn’t disclose subscriber numbers for its streaming video service, but assuming that Apple TV+ has 25 million subscribers, Daryanani wrote, the additional $2 a month per user that Apple would rake in with the pricing move would increase the company’s annual revenue by roughly $600 million. Apple is expected to top $400 billion in annual revenue for its next fiscal year, and Daryanani notes that “a large portion” of the contributions from the Apple TV+ price increase “would flow through to profit because there are not any notable increases in costs.”
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The Apple TV+ price hike is likely to have a greater impact on profit than another price increase the company brought forth this week. Apple also raised the price of an individual Apple Music plan to $10.99 a month from $9.99 a month, but Daryanani said that move “was reportedly driven by higher licensing fees,” so he thinks the company is mainly passing through those costs.