Apple TV+, celebrated as the last premium ad-free streaming service, could surprise its users by integrating ad-supported plans. Apple has recently strengthened its growing video advertising wing by hiring Joseph Cady, a seasoned ad executive from NBCUniversal, indicating a potential expansion of Apple’s video advertising efforts.
It was further reported that Cady would join a team that included other former TV executives who now led Apple’s advertising unit.
Cady managed partnerships between NBCUniversal and tech firms like Amazon, Google, and TikTok. Over recent years, Apple has recruited numerous advertising professionals from companies like NBC, DirecTV, Peacock, and other traditional media entities.
Even though Apple has not officially announced plans to introduce an ad-supported tier on Apple TV+, the streamer has already begun integrating advertisements into certain projects, including Major League Soccer coverage featuring Lionel Messi, with ad packages reaching up to $4 million.
This move suggests that Apple might join streaming services like Netflix, Disney+, and HBO Max, which have already launched ad-supported tiers.
The Take
The integration of ads in Amazon Prime Video’s offerings has debunked the theory that Amazon, with diversified business models, could avoid adopting ads in its streaming services. Analyst Tim Long from Barclays has pointed out that despite Apple’s financial stability, introducing an advertising tier could significantly enhance its streaming revenue, primarily to support the company’s ongoing content creation efforts.
The streaming industry has been trying to implement cost-cutting measures and exploring various strategies to increase revenue, including hiking subscription prices and launching ad-supported tiers. Recently, Apple TV+ hiked its subscription price from $6.99 a month to $9.99, with the potential introduction of an ad-supported tier offering a more affordable option for consumers.
Furthermore, Netflix launched its ad-supported tier in November 2022, priced at $7 monthly. As co-CEO Greg Peters highlighted in an investor call, this tier now boasts 23 million monthly active users, a substantial increase from the 15 million reported in November. The growth in ad-supported memberships has been nearly 70% quarter over quarter. Currently, the ad-supported option accounts for 40% of new subscriptions in the markets where it’s available.
Inspired by Netflix and its peers, Apple TV+ is anticipated to delve into ad-supported streaming, indicating a pivotal change that highlights the streaming industry’s complexities and shifting landscape. This potential move could align Apple TV+ with the industry’s prevailing trends, offering a competitive pricing model while navigating the financial complications of content production and platform maintenance.