Apple TV Plus Had ‘Immaterial’ Revenue in Launch Quarter Amid One-Year Free Deal

By Todd Spangler

LOS ANGELES (Variety.com) – Apple reported record-setting sales of nearly $92 billion for the three months that ended 2019 — but TV Plus, the flashy new subscription-video service it bowed last fall, wasn’t part of the tech giant’s growth story.

Apple TV Plus revenue “was immaterial to our results” for the period, CFO Luca Maestri told analysts on the company’s earnings.

The exec’s comments are not surprising: Apple is giving away free for one year to customers who buy a new iPhone, iPad, Apple TV, Mac or iPod touch. According to estimates by Ampere Analysis, the “vast majority” of Apple TV Plus’s roughly 33.6 million U.S. users as of the end of the year were not paying subscribers.

Over time, Maestri said, Apple expects that over time, Apple TV Plus will become a bigger part of the company’s growing services business, which increased 17% year-over-year in the quarter ended Dec. 28, Maestri added. Apple TV Plus is priced regularly at $4.99 per month (after a free seven-day trial).

Apple’s initial “give-it-away” approach in trying to vie for eyeballs against the likes of Netflix, Disney, Amazon and HBO in the streaming wars highlights its interest in using Apple TV Plus as a carrot to drive sales of its hardware. On the call Tuesday, execs did not provide commentary about the extent to which Apple TV Plus may have spurred device sales. During the holiday quarter, iPhone sales rose 8% after several quarters of revenue declines.

CEO Tim Cook said on the earnings call that Apple is primarily measuring the success of Apple TV Plus based on number of subscribers. But he didn’t shed any light on how many subs have signed up for the service at this point, except to claim that “Apple TV Plus is off to a rousing start.”

Cook added that “the product itself is about storytelling… We think if we do that well, there will be some number of [shows] that are critically acclaimed.”

Asked whether Apple has an advertising opportunity with Apple TV Plus, Cook responded, “we feel strongly what that customer wants is an ad-free product,” echoing Netflix’s often-reiterated position that it is still not interested in selling ads .

Apple TV Plus, launched Nov. 1 in 100 countries, has more than a dozen original TV series and movies. Those include “The Morning Show” starring Jennifer Aniston, Reese Witherspoon and Steve Carell; M. Night Shyamalan’s thriller “Servant”; Ronald D. Moore’s alt-history space-race series “For All Mankind”; “Oprah’s Book Club”; and Kumail Nanjiani and Emily V. Gordon’s docu-series “Little America.”