The battle for streaming dominance has shifted to balancing ad-free plans with ad-supported plans as companies fight to win over and keep subscribers.
Apple Inc
What Happened: Since launching its AppleTV+ streaming platform, Apple has spent billions of dollars on several blockbuster movies in an effort to gain subscribers.
The company has also added live sports content, including the rights to Major League Soccer and some Major League Baseball games.
Armed with exclusive movies, series and sports rights, AppleTV+ has gained subscribers for its streaming plan. The company is now ready to tackle the next wave of subscriber growth.
Following the success of streaming rivals Netflix Inc
According to a recent report from The Telegraph, Apple has been in discussions with a TV ratings body in the United Kingdom regarding advertising tracking. The move could be seen as one of the steps to get an ad-supported plan proved.
Apple has been in talks with the Broadcaster's Audience Research Board (BARB), the report said. Netflix, Disney and Amazon work with BARB on their ad-supported plans in the U.K.
Unlike other streaming platforms that have launched ad-supported plans either initially or since, Apple launched as an ad-free plan and hasn't gotten into the ad-supported market to date.
Apple hired Joseph Cady, a former NBCUniversal advertising executive, in March. This move could also point to the future launch of an ad-supported plan.
The company also tested selling advertising alongside its Major League Soccer rights last year, a move that likely capitalized on the signing of Lionel Messi, but could have also served as a test of advertising reception from subscribers.
Why It's Important: Armed with the deep pockets of the parent technology company, Apple's streaming division could now be tasked with focusing on profitability and making the high-cost spending worth it. The company has reportedly spent over $20 billion on original films and shows in recent years.
Launching an ad-supported plan could help Apple gain subscribers and also bring in additional revenue, a potential win-win for the streaming division.
Netflix announced it had over 40 million monthly active users for its ad-supported plan in May. The company shared recently that its ad-supported plan saw subscriber growth of 34% year-over-year.
Apple launched AppleTV+ in 2019 with a monthly cost of $4.99. The ad-free plan has risen in price in recent years and is now $9.99 per month for subscribers.
AAPL Price Action: Apple shares trade at $218.43 versus a 52-week trading range of $164.08 to $237.23. Apple stock is up 13% year-to-date in 2024.
