It’s been a little while since we focused on Apple‘s upcoming video streaming service, but it’s back with a vengeance with the news that Morgan Stanley’s Katy Huberty estimates Apple’s new service will be able to create such a big boost for the company’s massive services division that it will be able to compete with the biggest name in the game – Netflix.
To put that into numbers, the analyst is pegging the new service as being able to generate over $4 billion by 2025.
Huberty apparently believes that the market is underestimating how well Apple will be able to grow its already impressive services revenue at the same rate we have seen over the past few years. That rate has seen services become one of Apple’s biggest markets, and the addition of a video streaming service will only solidify that.
While not a first mover, Apple’s attractive and sticky customer set combined with low friction sign-up and payment system could drive users to its video platform, even with a less complete content portfolio vs. Netflix.
Even though the new Apple streaming service is not yet live, nor do we know what kind of form it will take or what the company will charge for it, Huberty believes that Apple will generate $500 million next year from that service alone, something that is quite the guess considering the lack of financial information we currently have for the service.
“We believe that Apple Video will become a reality sooner than investors think … Optionality around Apple Video helps emphasize the increasing contribution to growth from Services,” analyst Katy Huberty said in a note to clients Wednesday entitled “The Emerging Power of Apple Services, Part 3: Video a New Growth Driver in 2019.”
While we’re not going to argue with the outlook itself, we’d love to know how Huberty is able to come up with numbers without knowing how much the service will cost.
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