Summebride t1_itpm726 wrote on October 25, 2022 at 11:50 AM

Reply to comment by wujo444 in Apple raises the price of Apple TV+ to $6.99 by Murky-Insect-7556

When your cash hoard is hundreds of billions, $20 billion is couch cushion change.

And they HAVE made their argument. Apple, for many years, has stated they're trying to drastically alter their product mix so that hardware/items gives way to services revenue. Apple TV subscription business fits that strategy.

Selling an iPhone requires... an iPhone. Thousands of parts. Intricate assembly. Packaging. Shipping. Sure, there's revenue, but every phone sold means a lot of expenses to design and build the thing. Sell more iPhones, you have more costs because you're building multiple units.

With services, the revenue can be scaled and expanded without degradation or cost. The money you spend making Ted Lasso is the same whether you collect subscription money from 2 customers or 2 million customers.

wujo444 t1_itpwyjj wrote on October 25, 2022 at 1:23 PM

Saying there is no cost to streaming scaling is not entirely true. The service still pays for the data transfer and running servers per user; and the cost is highest for ATVP where all content is in high bitrate 4k HDR. They are still paying royalties to the creators. And it needs constant updates with new content which is not that easy to aquire.

And while Apple currently outsources production, it's not as trivial as you make it seem. Making a modern TV show is a business for thousands of people. There is big logistic behind each, and Apple orders dozens of them every year.

There are services with low upkeep, but this one has to constantly evolve with new content making it quite costly. Apple supposedly spend 22 bln dollars on R&D in 2021 - compare it to 18 bln dollars that Netflix spend on content creation and something like 7-8bln Appletv plus had budgeted.