Apple TV+ price increase is a small example of a big opportunity for Apple – Gene Munster

Apple’s recent 30% price hike for Apple TV+ highlights a broader strategy to boost revenue per device through expanded subscriptions, as well as higher prices for services and hardware. Veteran Apple analyst Gene Munster predicts that investors will increasingly view this metric as a key indicator of the company’s financial health.
Gene Munster via GeneMunster.com:
‎

Horace Dediu from Asymco estimates the average revenue per device per day is $0.47. I estimate the Apple TV+ price bump (Apple One price did not change) in the U.S., U.K. and Canada will increase average revenue per device per day from $0.47 to $0.4704. That is about four tenths of a cent increase per day. This would also add about $430m in high margin revenue, which would increase overall revenue by about 0.1% next year (The Street is looking for $435B) and earnings by 0.2%.
I estimate there are 60m total paid Apple TV+ subscribers. Here is my breakdown of what each group pays per month:
• 50% of the subs come from Apple One. I estimate 30m, or half of the 60m paid TV subs (Deepwater estimate), get the service through Apple One. As a point of reference, Netflix has about 305m paid subscribers. If you assume a third of the value in the Apple One bundle comes from Apple TV+, and there are on average 4.5 users per subscription (you can have up to six), that implies on average each sub is paying $2.22 per month.
• 35% of the subs are full paying. I estimate about 20m subs are full paying and now pay $12.99 a month.
• 15% of the subs get a discount. I estimate 10m subs come from outside Apple One and outside of the full-paying group. I believe on average they pay $6 a month.
Putting it together, the average user pays about $6.50 a month.
I estimate 60% of the 20m full-paying subs fall into the U.S., U.K., and Canada, which means about 12m subs will see the 30% increase. That translates to an incremental $432m in annual revenue, which increases overall revenue for the company in CY26 by 0.1%. That 0.1% increase maps to about the same increase in average revenue per device per day, inching it up from $0.47 to $0.4704.
I believe the company will spend just under $6B a year on content this year, and those 60m subs (attributing 30% of Apple One revenue to Apple TV+) generate $4.7B annually after the price increase.
I believe Apple’s intent is to gradually close the gap between Apple TV+ expenses and revenue, turning what has been a negative-margin venture into a profitable one over time. My guess is profitability is still a few years away.

‎
MacDailyNews Take: Apple TV+ is being run exceedingly well. The goal is clear: Focus on quality original content while slowly growing quantity. Apple TV+ is doing both very well.
Those who dismiss Apple TV+ as “woke crap,” don’t really watch much Apple TV+. Sure, some of that is unfortunately in there, as it is in every streaming service, but Apple TV+ offers, if anything, less “woke crap” than many other streaming services.
Apple TV+ is working. It’s just working slowly. it’s quality over quantity strategy is sound and its library of high-value original content is becoming more substantial every day.
Breakouts hits that permeate the zeitgeist like “Ted Lasso” and “Severance” are doing most of the heavy lifting for getting the word out. Apple could certainly do a better job of promoting the service.
Apple TV+ could lose $1 billion annually until the first Tuesday after Infinity and Apple would be perfectly fine; it wouldn’t even notice.
Last year, Apple Inc. generated average revenue of $1.07 billion per day. – MacDailyNews, March 20, 2025

‎
Please help support MacDailyNews — and enjoy subscriber-only articles, comments, chat, and more — by subscribing to our Substack: macdailynews.substack.com. Thank you!
Support MacDailyNews at no extra cost to you by <a hr
The post Apple TV+ price increase is a small example of a big opportunity for Apple – Gene Munster appeared first on MacDailyNews.