Morgan Stanley analyst Katy Huberty believes that Apple’s video streaming service will end up becoming a multi-billion dollar business in itself. It will also end up accounting a fair share of Apple’s growing Service business revenue.
Apple does not offer any standalone video streaming service. However, it has released a few shows exclusively on Apple Music and its currently working on plenty of more such shows for its streaming platform. It is currently trying to lure in more subscribers to its streaming platform by offering them access to exclusive programs and shows.
It is due to a combination of factors like sticky customers and low sign-up friction that Apple’s streaming platform could work well with customers despite not having a content catalog as attractive as Netflix.
“We believe that Apple Video will become a reality sooner than investors think … Optionality around Apple Video helps emphasize the increasing contribution to growth from Services,” analyst Katy Huberty said in a note to clients Wednesday entitled “The Emerging Power of Apple Services, Part 3: Video a New Growth Driver in 2019.”
“While not a first mover, Apple’s attractive and sticky customer set combined with low friction sign-up and payment system could drive users to its video platform, even with a less complete content portfolio vs. Netflix.”
Huberty believes Apple’s standalone video streaming service can generate revenues of $4.4 billion by 2025, up from an estimated $500 million in 2019.
Apple rarely has the first mover advantage in the services business but it manages to dwarf its competition with the sheer size of its iPhone and iPad user base which consists of over 1.3 billion users.
While Apple’s streaming service holds a lot of promise, the company has not really met with success with any of the shows it has released so far.