While Apple TV Plus has not yet boomed, investment bank JPMorgan Chase has told investors not to give up the service, which is expected to reach 100 million subscribers within five years,media reported. In an investor report seen by Apple Insider, Samik Chatterjee, chief analyst at JPMorgan Chase, said that by fiscal 2025, Apple TV Plus could have 100 million paying subscribers.
Although Apple’s streaming service’s content and apps are largely flat.
Chatterjee predicts that most users are now taking advantage of free promotions, but there are few promotions for qualified users. Current data show that only 5 to 15 per cent of qualified equipment takes advantage of this free year.
Part of the reason for the lukewarm response to Apple TV Plus may be that it has too few products, which Apple is actively improving. Apple TV Plus had eight original programming at the launch, but it has now grown to 28. Such orders of magnitude are much less content than its competitors, even on new platforms such as Disney Plus.
Chatterjee points out that quality is important, but it doesn’t say anything about it. Right now, Apple TV Plus is competing for talent and making winning content stand out. The analyst added that improving the quality and quantity of content would increase the likelihood of converting promotional content into paying customers.
In addition to quickly securing and adding new content, Apple also appears to outspend its competitors in terms of spending. Initial reports suggest apples will allocate $1 billion for content development, but that number could now be as high as $6 billion. Some of these investments can also drive Apple TV Plus subscribers through podcasts.
The analyst also outlined some of the signs that Apple TV Plus is growing rapidly. As an example, Apple TV Plus could open up an opportunity for Apple’s service business to grow beyond the iOS ecosystem.
“While the Apple TV Plus app has started slowly so far, we believe investors should not ignore its long-term prospects at this time as we see improvements in quality, quantity and budget that will drive the app (users) to increase,” Chatterjee wrote. The analyst predicts that by 2025, Apple TV Plus will have 100 million paying subscribers.
The analyst noted that Apple TV Plus’s paid subscribers will grow slowly throughout 2020, but expects a significant proportion of renewal users beyond the current trial period, and Apple’s install base will increase.
JPMorgan’s target price for Apple remained unchanged at $365. This is based on a 22.0x mixed p/e ratio and a earnings of $16.86 per share.