This past year, Apple has been developing video content, with a streaming service also in the pipeline. Apple has also began integrating its video content into the Apple Music platform, which boasts over 50 million subscribers. Apple Music has officially passed competing music streaming platform Spotify, in terms of subscriber volume.
Apple is not stoping its media development with video and music. The company may also be trying its hand in publishing, after acquiring Texture this year, a digital magazine subscription solution.
Once the Apple streaming service releases, we may be looking at an overall media business larger than Netflix and Spotify combined. Apple’s three media platforms are set to generate $37 billion in revenue by 2025, forecasted by Morgan Stanley. This is compared to Netflix’s forecasted revenue of $15.85 billion and Spotify’s revenue forecast for this year is $6.11 billion. The net worth of Netflix (NASDAQ: NFLX) is $151.84 billion, with Spotify’s (NYSE: SPOT) net worth at $31.96 billion.
Apple Music Vs Spotify
Apple has a much easier job at attracting customers to its music platform than Spotify does. The success of Apple Music derives from the original success of the iPod, iPhone and iPad. Consumers who already own Apple products are more likely to use the Apple Music service, as user-base numbers show. With an active installed base of 1.3 billion devices and an estimated 90 million iPhone users in the U.S. alone, if only 26% of those iPhone users use Apple Music, it will surpass Spotify in terms of U.S. user base.
Morgan Stanley says that if Apple bundle their platforms together, they can expect an increased revenue of 64%, compared to three individual platforms.
Morgan Stanley projects that the Apple streaming service will generate $4 billion in revenue this year alone. Spotify is expected to generate around $6.13 billion in revenue this year.
Apple Streaming Service Vs Netflix
It is said that once Apple launches it’s video streaming platform, it will give companies like HBO, HULU and Netflix a run for their money. Apple has already secured some huge content deals, despite being months away from the launch of the platform. These deals are with Oprah Winfrey, Reese Witherspoon and Jennifer Aniston. It is said that Apple has around 40 people working on upcoming content. The project is being lead by two ex-Sony executives.
A report stated that Apple may be launching their TV shows as a standalone subscription or as a bundle which includes Apple Music access. These are just rumors, but it is likely that Apple will package its streaming content with music access and news.
It is hard to predict what streaming platform will be more popular this far away from the release date. When Netflix hit the market, it already had a vast roster of movies/TV shows which kept subscribers busy for months. However, Apple will not be licensing any content from other producers. This means that the Apple streaming service will only have a small selection of shows for the first few months.. But if Apple can undercut Netflix’s pricing then it may be more favorable to customers.. although Netflix is not the only streaming service to watch out for.
The service is somewhat comparable to Amazon Prime, which provides access to video/music and fast shipping (free).
As of now, Netflix is responsible for around one third of all internet traffic in North America.
Apple Stock Price Prediction
Apple has been a media monolith before, thanks to its iTunes platform driving sales of music and video. Apple was also huge in the e-book market, before it got regulated that it. In fact, Apple still makes up 9% of e-book sales in the U.S. – second to Amazon.
These streaming endeavors could prove to be a driving force behind Apple stock in years to come. Music and video could add another $0.25-$0.75 to Apple’s earnings per share.
Market analysts have projected Apple to be at $13.72 a share in earnings by 2021, FactSet says.
RBC Capital Markets have predicted that Apple’s original-content development will cost the company money in the future. Stating that it is an attempt to bring in more customers into the Apple ecosystem. This year Apple is set to spend more than $1 billion on its video creation this year, which will make the company stand out against competition to say the least.
Once the Apple streaming service debuts it will be easier to predict revenue and subscriber numbers.
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