From from a note to Wedbush clients that landed on my desktop Thursday:
The Right Move at Right Time. Since Apple TV+ launched in November 2019 the streaming service has gained tepid success the last few years while the streaming arms race has been stepped-up to a new level during the pandemic with Netflix, Disney, Amazon, Hulu, HBO, and Peacock all flexing their content muscles. While Apple has found success with hits Ted Lasso and The Morning Show, we estimate that today Apple has roughly 20 million paid subscribers on the platform and ~45 million global accounts. This clearly is a fraction of the subs that other streaming stalwarts have on their platform…
MLB package would be a major strategic move for Apple. With Apple choosing not to buy a movie studio (MGM, Lionsgate, A24, Hello Sunshine) it is clear that Cook & Co. are heading down a different path of content growth with live sports programming a key potential piece of its future success. To this point, recent media reports (CNBC, NY Post) are now pointing to Apple aggressively bidding on MLB’s weekday package for next season…
Apple ready to spend billions on live sports content. With Apple spending ~$7 billion annually on original content and having roughly $200 billion of cash on its balance sheet, we believe the company is gearing up to bid on a number of upcoming sports packages coming up for contract/renewals in future years. We note that upcoming sports packages potentially for bid over the next four years that Apple can be involved with (in some capacity/semi-exclusive) are: NFL (Sunday Night Ticket), Big Ten, Pac 12, Big East, Big 12, other NCAA sports packages (2024 timing), NASCAR, and the NBA/WNBA.
Maintains Outperform rating and $200 price target.
My take: MLB weekdays is small ball. The NFL Sunday Night Ticket is the real deal, and acquiring it as an Apple TV+ exclusive wouldn’t come cheap.
It makes it almost futile to retain viewers the way the subscription process now is set-up in that someone can subscribe on a month-to-month basis, binge on the hit shows of their preference, and then unsubscribe and move on to another subscription service. Sports, though, can retain viewers better throughout the year.
Sports generate a higher retention of subscribers. While sports content doesn’t come “cheap,” at least it retains viewers. Concomitantly, networks spend inordinate amounts of monies seeking the next hit series or movie and as we know, that is an extremely difficult task. It is not unusual for a subscriber to spend more time trying to find a quality show to watch vs. the time invested in finding what eventually was selected. Not so with sports.
True and never more so than now and moving forward with sports betting and fantasy league conscription. I favor Apple investing in the NFL over MLB.
I also wonder what Apple Sports would potentially be like with AR/VR goggles. Seeing the play from a 360 degree view as if you’re on the field would be an incredible experience. And I think that’s one of the potential goals.
I think golf, hockey, volleyball, tennis are probably too limited in size and audience.
College sports though could prove interesting and connecting a younger demographic there could be a nice synergy.
The IPL alone is watched by about 400 million people in India alone and also has interest through out the sub-continent and Middle East.
Want to juice apple device sales and subscriptions in India? A compelling cricket viewing experience (with or without apple goggles) might be the ticket.