Needham & Co. Sees Doom for Standalone Video Streamers
11 AUGUST 2022 - When Apple announced Apple TV+, a lot of folks said it would be a failure. I wasn’t sure how we’d know. I argued at the time that Apple TV+ didn’t have to succeed by traditional standards. With iPhones, iPads, Macs, Apple Watch, accessories, and a slew of Services, Apple TV+ could lose money for years and not even show up as a rounding error. I argued then that the only services that have to worry about making money in streaming are the services that don’t do anything but streaming - basically, Netflix. I don’t know that I thought in terms of Apple TV+ and services like it killing Netflix, though. And so, thanks go to Needham & Co. analyst Laura Martin for giving me a new way to think.
Martin did eight-minutes on Yahoo Finance this week, all about streaming services. Regarding Apple, Martin said:
They can actually destroy the streaming business because they have other businesses that will actually make up profit or higher profit… iPhones are $1,300 these days. They can make profit on some other part of their business that justifies them spending this money on sports rights.
Her thoughts weren’t limited to Apple, though. Rather, she seems to think if streaming’s all you’ve got - you ain’t got a lot. As I mentioned before - Apple TV+ is practically the last thing in Apple’s arsenal currently. Not only does it not need to succeed in streaming to stay afloat, all the other stuff it has can be used to support and promote Apple TV+. Disney has legacy content, plus ESPN, plus theme parks and cruise liners to support and promote Disney+. Whatever the hell HBO/Warner/Discovery is calling itself this week has tons of legacy content (Martin’s really into that). And finally, Netflix has… Netflix. I guess that could explain the streamer’s push into mobile games. Recent reports say Netflix subscribers have barely touched those, though it’s a pretty new initiative. Where Netflix is concerned, Martin seems most excited about the announcement last month that Microsoft will work with Netflix on ad sales. She seems to see that deal as step-one of Microsoft eventually buying Netflix.
Her thinking bums me out a tiny bit. There seems to be no place in her world for a good video service to survive by simply being a good video service. That said, I’m not sure she’s wrong. If such things interest you and you’ve got eight-minutes, it’s definitely worth a watch.
I wonder if she’s run numbers on Spotify.
