Apple is expected to spend $1 billion on original content this year, Wedbush Securities analyst Daniel Ives says in new report
Apple’s long-awaited streaming service is expected to acquire more than 100 million subscribers in the five years after its launch, according to a report released Tuesday morning.
“If Apple executes with minimal speed bumps and aggressively acquires content given the company’s massive installed base and unmatched brand loyalty we believe reaching 100 million subs in the medium term (3 to 5 years) is a realistic goal,” Wedbush Securities analyst Daniel Ives wrote in a report that estimates that the company will spend $1 billion in original content this year.
According to Ives, that could translate into a $7 billion to $10 billion annual revenue stream over time for Apple, which would add roughly $15 per share to Wedbush Securities SOTP valuation on Apple.
On Monday, Apple announced a press event that will take place at 10 a.m. PST on March 25 at the Steve Jobs Theater, where it is expected to announce the launch of its new service.
The streaming platform, which currently has production deals with Oprah Winfrey, Reese Witherspoon, Jennifer Aniston, Steven Spielberg, and a list of other Hollywood players, will be met with a growing number of competitors as it looks to make a presence in the over-the-top (OTT) space. In addition to Netflix, Amazon, and Hulu, other companies expected to launch services include AT&T’s WarnerMedia and Disney.
Considering the crowded market, the Wedbush report also suggests that Apple start looking for entertainment studios to acquire, which will help ease the task of developing and producing content.
“While acquisitions have not been in Apple’s core DNA, the clock has struck midnight for Cupertino in our opinion and building content organically is a slow and arduous path, which highlights the clear need for Apple to do larger, strategic M&A (a24, Lionsgate, Sony Pictures, CBS/Viacom, Netflix, MGM) around content over the coming year to ‘double down’ and drive the services flywheel especially with its new video subscription service set to be rolled out,” the report said.