Apple TV. 4Ked.

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Mashing

your numbers is a terrible and embarrassing thing. We did that yesterday and we’re mopping up now. Apple is truly wonderful and amazing. Apple TV launched last week and already an analyst has suggested the service is a reason to buy the stock. That’s sweet.


Opinion is fine but accuracy shines brighter, like superior programing. Apple might be offering some of that, but not much. When Tim Cook announced Apple’s quad package of services last summer everyone heard that Apple TV had 24 shows lined up. Apple TV+ has precisely 9 shows now. Nine.

 

Last week HBO launched HBO Max., and NBC slipped-in the notion of offering their ad-supported “Peacock” streaming service for “free,” if you can stand the ads. Peacock is “on-demand,” but with those goddamn ads. Let’s just say the arena Apple’s entered with TV+ is exceedingly crowded, add they’re very late to the battle. Here’s our hi-def on-demand “Apple TV. 4Ked.”

 

gRAPHIC, THE STREAMING WARS

We

launched our piece “APPLE TV.  Big Show?” with errors.  Our math was wrong.  We failed to multiply the monthly subscription rate to reflect the annual price.  Fixed.  Additionally, it would have been better, were we to use current Apple Music subscriptions as the basis for comparison.

 

Apple Music currently has 60 million subscribers.  60 million subscriptions times Apple TV’s $60 annual fee equals $3.6 billion in revenue.  Apple’s FY2019 revenue estimate is $274 billion.  That means if Apple TV instantly acquired 60 million subs, all of which stayed and paid for an entire year, Apple TV would generate $3.6 billion in revenue, equaling 1.3% of FY2019 estimated revenue.

 

The journey from there to earnings is a very costly one, in a very crowded arena which includes heavy hitters like Disney, Prime video, Netflix, and coalescing ones such as AT&T’s WarnerMedia, and their high quality HBO content.

 

 

HBO

HBO was begun in New York in November of 1972. They’ve been in the media business for 47 years. That translates into experience, know-how, and reputation for quality programing. That also means that Apple is not competing with the third-string, regardless of their mountain of cash. Raw cash is not king in this business, unless you simply attempt to buy everyone. That makes you a vacuum cleaner, not a “go-to” streaming service.

For

perspective’s sake, Apple Music has taken four years to reach 60 million subscribers, and did so against fewer competitors.  Netflix has been building it’s business for 22 years, owns by far the best predictive algos, a massive vault of original content that will benefit them forever, scads of relationships with working content professionals, and again by far the biggest data ball which guides content spending like a freakin’ sky-sweeping search light.  They also have a reputation for “hands-off” production, one beloved by creators.  With all that, they now sit at 151 million subs.

 

In media “content is king,” it’s extremely expensive, takes time, and Apple doesn’t have any.   Yes Apple has money, but competition is fierce, and creators want to be seen.  That often means going with services with lots of subscribers, using long contracts–like five years.  Netflix is yet looking for a profit, after more than two decades.  Our point is with cheerleading analysts when it comes to selling AAPL using Apple TV.  Apple’s strengths are myriad.  But TV simply isn’t one of them.  

 

The Investing Journey

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Additional resources:

Investopedia.com.  Seriously Wonderful.  Fact.
http://www.investopedia.com/
Charles Schwab.  In Our Opinion, the best broker going.
https://www.schwab.com/public/schwab/client_home
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