Apple Inc. (NASDAQ: AAPL) has grown far larger than Walt Disney Co. (NYSE: DIS), which was not true a decade ago. Apple makes billions of dollars a quarter. Disney has lost money in some quarters this past year. In terms of video streaming, however, Disney has become such a successful competitor to market leaders Netflix and Amazon Prime that Apple TV+ finds itself up against another streaming juggernaut.
Disney announced earnings that were better than expected, but most of its businesses continue to be staggered by the COVID-19 pandemic. Revenue plunged 22% to $16.3 billion. Net income dropped 99% to $29 million. Revenue from its parks business took the worst of it, down 56% to $3.6 billion.
Disney+ posted wildly successful figures. Its subscriber count jumped to 94.9 million from 26.5 million and sits at half the total subscriber count of Netflix worldwide. Apple TV+ wants to elbow its way into this business. Despite its balance sheet and brand, the Disney figures make that less likely.
Apple TV+ does not provide streaming subscriber numbers, but the figure has been estimated at 40 million. However, outsiders assume most of these are tethered to Apple device purchases that allow customers to get Apple TV+ free with new iPhones, iPads and Macs. Will they renew when they have to pay? If the past offers any example, probably not.
Disney’s natural advantages derive from its library and that has all Disney, Pixar, Star Wars and Marvel films. Disney adds aggressively to that library every month. Apple TV+ has a much, much smaller set of programs, and the growth of its library has been modest. Its new programs are not usually as star-studded as those on Disney+, Netflix or Prime Video.
Another challenge to Apple comes from the theory that most households that get streaming media services will only subscribe to two or three. The established services have a foothold that is, in some cases, years old. Apple may need to nudge at least one of these aside to be successful.
Apple TV+ had its work cut out for it a year ago. With Disney’s latest news about Disney+, it just got harder.