It wouldn’t be the first time. In October, Sacconaghi seconded Rod Hall’s concerns about the impact of the service’s deferred revenue. Both analysts had to eat their words.
From a note to clients Monday that landed on my desktop today:
Our analysis of Apple’s FY Q1 indicates that ~10% or less of eligible customers – likely under 10M – have opted to take up their 12-month free trials of Apple TV+ to date.
We see 3 plausible explanations for this surprisingly low take rate: (1) Apple hasn’t been able to effectively promote TV+ – to which we would encourage the company to more directly leverage its 1.5B device installed base; (2) Apple may be conservatively estimating its “take rate” or deliberately scaling its promotions of TV+ slowly to mitigate the negative accounting impact of its early ramp; and / or (3) Apple TV+ is failing to resonate with customers, perhaps due to its limited content offerings, in contrast to the mega-launch of Disney+ (which comparatively achieved 10M subscribers in 1 day, despite offering a two week free trial vs. Apple’s one year free trial).
We encourage investors to closely monitor the adoption of TV+ going forward. While Apple’s management has indicated it won’t disclose subscriber numbers this year, the implied take rate of TV+ in FY20 will nonetheless provide some indication of potential acceptance of the service, as well as Apple’s ability to successfully launch meaningful new revenue-generating services.
My take: I take whatever Sacconaghi and Hall say about Apple TV+ with a grain of salt. For what it’s worth, Ampere Analysis, which tracks these things, puts the number of Apple TV+ subscribers at 33.6 million, more than triple Sacconaghi’s estimate.