Apple’s forthcoming streaming service will have over 100 million subscribers worldwide in its first year, according to Barclays.
Barclays analyst Tim Long issued a note today estimating that Apple could entice 100 million or more customers into paying for its premium video streaming service Apple TV+, reads a new report CNBC.
Barclays issued the following statements in support of its claim:
- “We model 222M hardware devices sold by Apple over the next 12 months.”
- “We assume that about 50% of those buying a device in the first year will accept the service, yielding well over 100M subscribers a year from now. We exclude sales to China and our estimate of second and third devices at families.”
- “We assume that the trial period will last for one year, at which point we expect subscribers to decline as users opt out, and are partially offset by new additions. Of course the rate of churn will depend meaningfully on how quickly Apple can ramp up its content library.”
Apple is entering a competitive market: Disney is also preparing a streaming service launch on November 12, NBC plans a service next year and AT&T’s WarnerMedia will also launch a competing product under the HBO brand name. Netflix is the current leader in the market with over 158 million subscribers.
Long explains that Apple TV+ will be the Cupertino company’s main growth driver over the next year, and that the “way that Apple will account for the free trial will move sales from the hardware line items on the balance sheet to services revenue.”
“From an accounting perspective, for each user that is assumed to take the service, Apple will record a $60 contra revenue item to the hardware, and commence recognizing $4.99 per month in Service revenue,” reads the note.