Daniel Ives: “Apple ready to spend billions on live sports content”

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.

10 Comments

  1. bas flik said:
    streaming content is not really lucrative business. i do not understand apple entering this market. Spotify never made any money in 20 year. Cables are cut. People make their own movies nowadays. also real music is disappearing.

    2
    January 14, 2022
  2. Jerry Doyle said:
    Sports always have a broad and devoted viewing audience. The viewers follow not only their respective teams, but other teams, too. The problem with most anything outside sports is the need to find a quality entertaining show, and that is extremely difficult.

    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.

    6
    January 14, 2022
    • Mark Visnic said:
      Jerry: “Sports always have a broad and devoted viewing audience. The viewers follow not only their respective teams, but other teams, too.”

      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.

      3
      January 14, 2022
  3. Robert Paul Leitao said:
    Acquiring sports rights is hugely expensive and obviously the major sports leagues would like to see “Apple-sized dollars” enter the fray. The benefit to Apple of acquiring sports rights is the content doesn’t require development and there’s already an audience measured domestically in the tens of millions of households eager for sports content and more sport content. I’ve said several times I expect Apple to eventually push off the App Store model and drive Services revenue through subscriptions similar to what’s occurred with music streaming. Sports might be the next viable market to drive consumer engagement through Services.

    0
    January 14, 2022
  4. Dan Scropos said:
    There’s long been a rumor that Apple’s aim is new curation and that they plan on changing the way we watch sports.

    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.

    3
    January 14, 2022
  5. John Butt said:
    There is a world beyond the USA

    0
    January 14, 2022
    • Bart Yee said:
      Very true and Apple could certainly start dipping into Soccer, Rugby, Cricket in international and regional markets depending on distribution on iPhones, iPads, or Apple TV or all. Basketball, maybe cycling & auto racing could also be options.

      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.

      3
      January 14, 2022
      • Darren DMW said:
        @bart … you make a good appoint about cricket. PED readers are probably unaware how huge televised cricket is in India.

        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.

        2
        January 14, 2022
        • Bart Yee said:
          @Darren Yes I was thinking precisely about cricket and India, and a perfect place for Apple to support India Sports and do a bit of Apple hardware, services and content advertising among others. Assuming Apple gets past some of these labor condition issues, advertisers might consider Apple to be a halo company they might latch onto. Getting a lot more young rising middle class Apple users and viewers is a very achievable goal, especially if Apple can offer India-made iPhone SE 2022, 11, 12, 13 models to cover price points and some iPhone 14 as flagships.

          1
          January 14, 2022
  6. Augmented reality has been giving us magical lines and numbers on football (European & North American) & baseball fields for several years now. Golf courses & race tracks too. I can see the markets for sports-specific apps that score points with dedicated fans growing. I want my glasses to flash a tiny arrow over Bullwinkle, Bambi and that child chasing a ball in my path.

    3
    January 14, 2022

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