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Apple quietly admits it's paying too much to run its streaming service

Peter Kafka   

Apple quietly admits it's paying too much to run its streaming service
Tech2 min read
  • Apple's streaming service has a well-deserved reputation for generous spending on TV shows and movies.
  • Now Apple would like to pull back a bit on those budgets.

Apple's streaming service makes programming that critics often like. As do the people who watch its TV shows and movies.

The problem for Apple: Not that many people watch the stuff on Apple TV+. And the service has a well-deserved reputation for generous spending.

Apple doesn't seem to have a plan to get more people to watch its stuff anytime soon. But it is trying to pull back on the spending side.

That's according to Bloomberg's Lucas Shaw, who reports that Eddy Cue, the Apple executive who oversees the company's services businesses, is telling Zack Van Amburg and Jamie Erlicht, who run Apple's studio, to "exert more control over spending on projects."

Shaw also points out some examples of runaway spending at Apple, including bloat on "Severance," its glum, well-regarded dystopian/workplace series. The new season of that show will cost $20 million an episode — a staggering sum for a series that doesn't have any digital dragons.

On the one hand: Join the club. It's super common for new streamers to stumble and overspend as they enter the market.

On the other hand: There are good reasons that Apple has long been known as the most profligate check writer in Hollywood. One is that Apple is worth more than $3 trillion and makes $100 billion a year in profits, so everyone knows the money is there.

Another is that the company spends a ton of money — all the while insisting that it's not the most profligate check writer in Hollywood. And also insisting that the money it is spending is worth it: Hence the company's head-scratching claim that its recent box-office duds are actually profitable.

Which brings up, again, the question we've been asking Apple since 2019, when it rolled out Apple TV+: Why does Apple have Apple TV+?

The two most common answers are:

  • Apple wants to make more money from "services" — things other than the iPhone and its other devices. So maybe this could be a valuable service one day.
  • Apple wants to use Apple TV+ as a marketing service. If people like Apple TV+ shows and movies, the logic goes, they'll be more likely to buy more Apple devices (even though you can watch those shows and movies on non-Apple devices).

Both of those answers are fine, but they still don't feel fully adequate. In large part, because Apple TV+ simply isn't that popular: Antenna, a subscription-tracking service, believes Apple had 18 million US subscribers at the end of January — a fraction of what streaming leaders like Netflix and Disney had.

And with the exception of "Ted Lasso," most of Apple TV+'s shows haven't found a meaningful audience. Which makes it hard to argue that this is helping its services push or its marketing efforts.

So what does Apple pulling back on spending — even if it's just a bit — actually mean? I've asked the company for comment, but don't expect to hear back. Anyone want to offer another theory?


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