Analyst: Apple TV+ Should ‘Reconsider’ Business Model

Apple TV+ may have been the first of several big-name subscription streaming video services (Disney+, HBO Max, Peacock) to take on Netflix, Amazon Prime Video and Hulu, but its market penetration continues to lag, according to new data from Wall Street analyst MoffettNathanson.

Citing an online quarterly survey of 8,500 homes, the New York-based research firm found that just 7% of respondents used the $4.99 monthly service, that’s down from 8% in the previous survey in May.

By comparison, 73% of respondents used Netflix, which was up 1%, with Prime Video up 1% as well at 52%. Disney-owned Hulu use was unchanged at 36%, while Disney+ increased to 28% (from 27%).

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“The Apple TV Plus data points should force Apple to reconsider their [SVOD] strategies and options at this point,” Michael Nathanson wrote in a note.

Apple TV+ is currently included for free (for 12 months) with the purchase of any Apple hardware product, including iPhone, iPad, iPod Touch and Mac desktop computers. Disney+, which has offered Verizon subscribers a free year of service, saw the number of telecom users decline 18% in the quarter.

Nathanson contends much of the Disney+ shrinkage could be attributed to the lack of new episodes of original series “The Mandalorian” — despite the July 3 premiere of the Hamilton movie.

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“In short, both services are in danger of losing momentum during the current production shutdown,” Nathanson wrote.

Regardless, the analyst, who is bullish on Netflix, believes the SVOD pioneer can add 30 million subs worldwide in 2020. Motivating force behind SVOD growth: pay-TV costs. Nathanson found that 57% of Netflix subs opted for SVOD due to the exorbitant monthly cable bill. Data points reflected by Prime Video (59%), Hulu (56%) and Disney+ (49%).

Netflix reports second-quarter fiscal results at market close today.

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