Apple could be building a media business bigger than Netflix and Spotify combined

“Apple has been developing video content for over a year, with supposed plans to launch its own video-streaming service. For now, Apple has integrated some of its video content with Apple Music, its premium music subscription service, which has over 50 million subscribers,” Adam Levy writes for The Motley Fool. “Apple Music now has more U.S. subscribers than Spotify. Apple’s push into media doesn’t stop with music and video. The company also acquired Texture, a digital magazine subscription service, earlier this year.”

“Apple’s big push into media could result in a business bigger than Spotify and Netflix combined. A bundle of all three services could propel the business to $37 billion in revenue by 2025, according to analysis by Morgan Stanley’s Katy Huberty,” Levy writes. “For reference, analysts estimate that Netflix will generate $15.85 billion in revenue this year and Spotify will bring in $6.11 billion.”

“Apple has an active installed base of 1.3 billion devices,” Levy writes. “While controlling half of the devices in Americans’ pockets can certainly help drive subscriber growth, a bundle will give Apple an extra benefit. Huberty predicts that the bundle option would provide a 64% revenue bump compared to offering stand-alone services only. She expects Apple to offer both stand-alone and bundled options, resulting in revenue between $22 billion and $37 billion in 2025. That’s bigger than Spotify and Netflix combined today.”

Read more in the full article here.

MacDailyNews Take: Once again: We’d really like to see a way to pay for all of the Apple services we choose for one price. Give us a bunch of tick boxes and let us choose our combination of iCloud storage, Apple Music, iTunes Match, etc. and let us pay a single price for all of our choices.MacDailyNews, October 17, 2016


  1. I guess services like Apple Music etc is good for the stock.

    but people shouldn’t confuse revenues with profits.
    Spotify and Netflix (last i checked some months ago) lose money.

    Profits from Apple services actually come from iCloud subscriptions and Apple Care warranties. Tim Cook himself has said he’s not into Apple Music for the money.

    I’m ok with putting some of Apple’s hoard of cash into Music, films etc but they should also double down on hardware like Macs which are big money earners. Macs are way more profitable than Netflix… (note also iCloud and Warranty services earnings are tied to hardware sales)

    1. Apple should never lose sight (nor give lame lip service) to keeping it’s Mac line in tip-top ship shape and Bristol fashion. At the end of the day it should be a matter of pride, not some dreary obligation with half-assed execution on their part.

    2. You should probably look this information up rather than guessing. Netflix is making money. They made 384 million last quarter.
      Spotify is losing money. They lost 90 million last quarter. However, they spent 343 million in financing costs. They are losing money because they’ve done nothing but borrow money since their inception.

      Inherently, there is money to be made in the streaming music business. Apple has plenty of capital to provide for such things and you can be sure they are making money on this. There is a reason they are focusing on their services business right now.

      1. are you sure?

        Netflix has a convoluted accounting system where it shows ‘profit’ by removing spending from calculations. It finances production by debt which it accounts for separately. Perhaps the articles below are out of date but I don’t have energy to wade through Netflix’s obfuscations in accounting.

        The Guardian:
        “Netflix declares a small profit – net income was $290m in the first three months of 2018 – because it is able to spread the spiralling costs of making programmes over a number of years. However, the company has almost $30bn of debt and liabilities across its balance sheet.”

        “”The expenditure behind the casting coups and award-winning content, however, is significant. Netflix expects a negative free cash flow of between $3bn to $4bn this year – meaning the amount its spends on content, marketing and other costs in 2018 will exceed what it earns from subscribers by at least $3bn. It needs debt, and willing banks, to do this. Last month, Netflix raised almost $2bn in debt – its largest raise to date and the second time in less than a year it has turned to the debt market – to continue to feed film and TV content to the binge-watching generation it helped create”

        Motley Fool Feb 1 2018:

        Negative cash flow and increasing debt — in addition to the $17.7 billion in future content spending obligations — will likely make value investors everywhere cringe.


        July 2018:
        “For some painfully idiotic reason, analysts seem to judge Netflix by a single benchmark: the number of subscribers.

        If subscriber growth is strong, Netflix stock soars.

        I say this is ‘painfully idiotic’ because Netflix loses money year after year. The more subscribers they bring in, the more money they lose.

        At the end of 2015, for example, Netflix had 75 million subscribers. But its Free Cash Flow was NEGATIVE $920 million.

        The following year, Netflix had grown its subscriber base to 93 million. Yet its Free Cash Flow had sunk even further to negative $1.65 billion.

        By the end of 2017, Netflix subscribers totaled 117 million. But the company burned through $2.02 billion.

        So when you do the math, you see that each Emmy nomination this year cost Netflix $17.8 million.

        That’s a lot worst than last year, when Netflix’s 92 nominations at the 2017 awards cost them $16.0 million.

        Clearly the more ‘successful’ Netflix becomes, whether in the quality of its content, or in attracting subscribers, the more money they lose.”

  2. audio books with the bundles or as a subscription option just like audible or like some competitors where you have access to any of the available audio books while a subscriber (like Netflix is; no ownership just all you can eat).

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