In the battle for streaming subscription supremacy, tech giant Apple's (AAPL 0.20%) Apple TV+ may be faring much better than was previously believed -- by some measures, anyway.
Apple hasn't shared much information about its streaming subscriber base, but most reports have been something less than encouraging: One analysis made the case that Apple TV+ has been tried by only 5% of streaming households in the fourth quarter of 2019, making Apple TV+ much less successful than competitors like Disney's (DIS -1.46%) Disney+, which 23% tried. But new numbers from analysis group Ampere Analysis have a different perspective.
According to Ampere Analysis, Apple TV+ actually has around 33 million subscribers in the United States a scant three months after its release. That number is impressive, but it's also misleading.
Image source: Getty Images.
33 million, wow!
If Apple TV+ really has 33 million U.S. subscribers, then that's very impressive indeed. That would beat Disney+, which currently has something north of 20 million subscribers, according to most estimates. Incredibly, it would also beat Disney-controlled Hulu, which had more than 28 million subscribers at last count and which may now have as many as 31.8 million. The growth implied by this figure would be staggering, too: Apple TV+ only came out in November, after all. Disney+'s growth since hitting the market about two weeks later has been rightly called impressive; Apple TV+'s would have to be considered even more so.
Is Apple TV+ really at 33 million subscribers? That's hard to say, given that Ampere Analysis isn't sharing information about how it came up with its numbers. There is one big reason to believe that Ampere Analysis' figure is not far off the mark, though -- and, unfortunately for Apple, it's also a huge reason to be skeptical about how much this huge subscriber base actually matters.
How to add 33 million subscribers in 90 days
Reports of Apple TV+'s meager market share among the general streaming public and reports that Apple is sitting on a massive subscriber base of over 30 million are not as contradictory as they may seem. To reconcile the two, we just have to remember one of Apple's strategies for growing Apple TV+: Namely, giving away year-long subscriptions to customers who purchase certain Apple products. Customers who purchased a new iPhone, iPad, iPod Touch, Apple TV, or Mac between Sept. 10, 2019, and Apple's launch in November have been eligible for a free year of Apple TV+. Apple's iPhones alone sell hundreds of millions of units a year, which makes it a bit easier to believe Ampere Analysis' numbers.
But are these "users," or merely subscribers? Agreeing to a free year of Apple TV+ when prompted -- or allowing an Apple Store employee to help you set up your free year while you're buying your new device -- is not the same thing as actually sitting down and watching an episode of The Morning Show. While purchasers of Apple devices do have to opt into the deal (they aren't automatically and passively signed up), the effort involved here is minimal.
Illusory numbers
Apple TV+'s subscription count may really be higher than Hulu's or Disney+'s (though that's far from certain). Even if true, however, this doesn't mean that Apple TV+ has more users than Hulu or Disney+. The huge number of subscribers could be an illusion -- and, actually, it's one we've seen before.
Amazon's (AMZN 0.01%) Amazon Prime Video service has long been rolled into its Amazon Prime premium account program, which also includes perks that have nothing whatsoever to do with streaming video: Things like special deals on Amazon's Prime Day, for instance, or free two-day shipping on eligible items from Amazon's online shop, or streaming music through (a limited version of) Amazon Music. Various analysts have tried to figure out how many of Amazon Prime's subscribers actually use Amazon's subscription video on demand (SVOD) service; one now-dated 2016 analysis pegged it at 80% (there is no reason, by the way, to assume that this figure would apply in any way to the use of free-with-devices Apple TV+ accounts; the point is simply that not all customers take advantage of the free perks they are signed up for).
Promotional subscriptions can be dangerous things. They inflate subscriber counts and make headlines, but they can come back to haunt companies when they lapse. Witness the grim fate of AT&T's (T -0.09%) live TV streaming service, formerly known as DirecTV Now and now operating under the brand name AT&T TV Now. Investors once believed that AT&T's service would best Sling TV within months; instead, the bottom fell out of over-hyped subscriber numbers when too many promotional accounts lapsed at once. There were other factors involved, but AT&T and observers alike were quick to cite the lapsed promotional accounts, and not without reason. AT&T's situation looks particularly bad now that legal filings allege some promotional accounts were not merely freebies, but rather fabricated subscriptions which were sometimes even assigned to unwitting "customers."
Truth versus technicalities
It's perfectly possible that Apple TV+ has more subscribers than several of its flashier competitors. If so, though, this looks like a victory on a technicality. It remains unlikely that Apple TV+ has as many active users as Disney+ or Hulu, despite Ampere Analysis' choice of words; other analysts have found otherwise. It also remains virtually certain that Apple TV+ is being badly outstripped by its peers in paid subscriptions.
Apple itself has provided one very clear indication that Ampere Analysis's numbers are either incorrect or, at their core, unimpressive. The company came out with its latest quarterly earnings report this month, and the report made no mention whatsoever of Apple TV+'s subscriber count -- despite Tim Cook's assertion on the company's earnings call that Apple was "focused" on subscribers as the best measure of Apple TV+'s success.
The outlook remains shaky for now, and this time next year could be rough for Apple TV+ if things don't improve before this apparently huge proportion of its subscriber base moves out of the free one-year window.
