The skepticism about Apple Video comes at a time when Apple has been struggling with weak demand for the iPhone
Apple Inc. is widely expected to introduce an original video programming service at an event next week, but so far analysts aren’t convinced that the initiative will provide a major boost to earnings.
If Apple Video adds 20 million subscribers who pay US$15 a month by the end of 2020 — what Goldman called a bull-case scenario — that would likely only increase consensus earnings expectations by 1 per cent, according to analyst Rod Hall. An Apple News product that costs US$10 a month for a subscription would add 0.4 per cent to earnings.
“The key question for us on this is what the anchor value in such a bundle would be from the point of view of a consumer,” Hall wrote. “In the case of Amazon it is free shipping but in Apple’s case the core driver is less clear to us.” Because of this issue, analysts have suggested Apple enter the video-streaming space through acquisitions rather than building out its own service. Last month, JPMorgan wrote that Apple investors were likely looking for the company to use its massive cash pile to “insulate the business against often-seen disruptions in the technology landscape” by buying a competitor. It suggested that Netflix, along with video-game maker Activision Blizzard and speaker company Sonos, could be a strategic fit.
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