The Apple TV+ Problem

Apple TV+ is the most interesting failure of the streaming wars, and I use “failure” carefully. By any straightforward commercial measure, the service is losing billions of dollars annually and has failed to build the subscriber base that Netflix, Disney+, and Max (formerly HBO Max) have assembled. By any straightforward creative measure, it is producing some of the best work in contemporary television.

Both of these facts are true at the same time, and the contradiction is the service’s defining structural feature. I want to try to describe the contradiction clearly, because the outcomes of Apple TV+’s current strategic moment will matter for the shape of prestige television over the next five years.

The slate, named

Let me name the shows Apple TV+ is currently producing or has recently produced. Ted Lasso. Severance. The Morning Show. Slow Horses. Silo. Pachinko. Bad Sisters. Shrinking. Dickinson. For All Mankind. Mythic Quest. Acapulco. Platonic. The Afterparty. Sugar. Masters of the Air. Manhunt. Presumed Innocent. Lady in the Lake. Disclaimer. The Studio. The Changeling. Defending Jacob. Extrapolations. The Reluctant Traveller with Eugene Levy.

This is a specific kind of slate. The shows are, broadly, adult-coded. They are written for audiences who are, broadly, above 30. They are often adapted from literary source material. They are produced at substantial budgets. They feature specific A-list actors (Jennifer Aniston, Reese Witherspoon, Jon Hamm, Harrison Ford, Helen Mirren, Jake Gyllenhaal, Cate Blanchett). They have, in aggregate, received an unusually high ratio of critical-to-commercial recognition.

The subscriber problem

Apple TV+ has, by most available estimates, somewhere in the range of 40 to 50 million subscribers globally, compared to Netflix’s 280 million and Disney+’s 180 million. The service is generating subscriber growth (the Ted Lasso window in particular drove substantial sign-ups), but it is not closing the gap.

The subscriber problem is, in part, a content-volume problem. Apple TV+ produces roughly 40 to 50 original shows per year. Netflix produces several hundred. A casual viewer paying for one or two streaming services will not choose Apple TV+ first unless they are specifically interested in the prestige-drama slate.

The subscriber problem is also, in part, a discovery problem. Apple’s app design prioritises the specific shows Apple is currently promoting, which means deep catalogue items are effectively invisible to new users. A subscriber who signs up to watch Slow Horses may not, without specific effort, find Pachinko.

The commercial-quality contradiction

Here is the interesting part. Apple TV+ is producing, across any objective measure of prestige television, some of the highest-quality drama of the current moment. Severance and Slow Horses are, by broad critical consensus, among the best contemporary prestige dramas. The Morning Show, whatever its unevenness, has delivered specific peaks. Pachinko is a work of extraordinary ambition. Bad Sisters is as well-constructed a dark comedy as the decade has produced.

These shows cost more per episode to make than Apple’s subscribers are paying for the service. The specific unit economics do not work, and Apple knows this. The service is operating, in effect, as a strategic loss-leader to support Apple’s larger ecosystem ambitions.

What Apple seems to want

Based on the slate, the stated executive communications, and the specific creative choices being made, Apple TV+ appears to want to be the streamer that high-prestige creative talent chooses to work with because it offers the best working conditions. The pitch to talent goes something like: we will give you higher production budgets than Netflix, more creative control than HBO, and a commitment that your show will be produced at your stated length rather than compressed to fit algorithmic preferences.

This pitch has worked. Apple has secured deals with significant creative figures (Martin Scorsese, Sofia Coppola, Alfonso Cuarón, Chris Storer, Dan Erickson) that other streamers were not able to match.

The question is whether the strategy is economically sustainable. Apple is wealthy enough to absorb a decade of streaming losses without it materially affecting the company’s overall financial position. But there is a limit, eventually, to how much the company’s other divisions (iPhone, services revenue, the Apple Store) can subsidise a money-losing content arm.

The comparison cases

The comparison cases are HBO (now Max) and Netflix, and Apple TV+ fits in the middle in a specific way.

HBO, historically, was the prestige-anchor streamer. Its quality was reliable. Its subscriber base was solid. Its business model (expensive premium cable subscription) supported a specific scale of content investment. The transition to Max, and the subsequent Warner Bros. Discovery merger, has disrupted this. Max is no longer the guaranteed home of prestige drama that HBO was. Shows that would have been HBO fifteen years ago are now often at Apple TV+ instead.

Netflix, historically, has been the volume streamer. Its quality is uneven because its content strategy is breadth-based. Its specific prestige shows (The Crown, Ozark, Squid Game) are effective, but they sit inside a much larger catalogue of commercially-calibrated medium-quality content.

Apple TV+ is trying to occupy the HBO position (prestige-anchor) while competing with Netflix for the highest-tier creative talent. The strategy is coherent in principle. The economics are precarious.

What happens next

Three possible futures.

Apple continues the current strategy indefinitely. If Apple’s leadership remains committed to TV+ as a strategic asset rather than a profit centre, the service could continue producing prestige television at its current quality level for the next decade. This is the future I would prefer. It is not guaranteed.

Apple cuts back to a narrower slate. If Apple’s financial discipline reasserts itself, TV+ could contract to a smaller number of flagship productions. Slow Horses, Severance, and The Morning Show might survive. Smaller shows would be reduced or eliminated. The slate would become more commercially strategic and less creatively ambitious.

Apple effectively sells the streaming business. Less likely, but possible. Apple could, at some point, merge or sell TV+ to a larger-scale streaming entity (Disney, Warner, Netflix). This would be the end of the current model, and the specific shows currently in production would continue under new ownership.

My bet is the second future, arriving within the next three years. The current slate is not commercially sustainable at its current scale. The question is what contracts first and how much of the prestige quality survives the contraction.

What this costs the broader ecosystem

The larger cultural stakes here are about whether prestige television as a production format continues to exist at scale. Apple TV+ is currently the single largest institutional funder of adult prestige drama. If Apple contracts, the slate does not simply move to other streamers. Much of it does not get made at all.

This is the specific cost that would follow from an Apple retrenchment. Slow Horses is made because Apple has committed the budget across seasons. A more cost-conscious commissioner would order fewer seasons at tighter budgets, and the show would suffer. The same logic applies to almost every show on the current slate.

I would like to see Apple stay committed. I am not fully confident that they will. The next two or three years will tell us whether the current quality level survives the accounting.