Disney+ Hits 103.6 Million Paid Subscribers as Apple TV+ Remains in Sixth Place

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It’s been less than two years since Disney+ took the world by storm, launching to considerable fanfare only not even two weeks after Apple’s own Apple TV+ streaming service made its debut.

Now, eighteen months later, the contrast between the two streaming services has become even more apparent, as Disney+ has — quite unsurprisingly — continued to amass subscribers at an alarming rate, while Apple TV+ chugs along at a much more leisurely pace, cranking out premium content while leaving many wondering if its base of paying subscribers has been growing at all.

It took Disney+ only three months to reach 28.6 million subscribers, and while analysts were left mostly guessing about how many subscribers Apple had accumulated in that same time frame, most agreed that both Disney+ and Apple TV+ were in the same ballpark.

However, it also wasn’t a fair “apples-to-apples” comparison (no pun intended), as Apple TV+ was mostly giving away its subscriptions for free (and still is), while beyond an initial trial period and a few more specific free one-year offers, most Disney+ subscribers were actually shelling out money for the service. We can probably all agree that there’s a big difference between a paying subscriber and somebody who is merely taking advantage of a service that’s included with the purchase of their iPhone, iPad, Mac, or Apple TV.

Either way, however, it’s fair to say that Apple TV+ and Disney+ are no longer even close to being on the same playing field. According to the latest numbers from Disney’s Q2 earnings report, the service now has 103.6 million paid subscribers — that’s over a 300 percent increase from this time last year.

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Further, just to be clear, unlike Apple TV+ these are paying subscribers — people who are happily handing over $6/month or more to The Mouse. While Disney+ likely still has numerous subscribers taking advantage of various free trials and promotions, these folks are not included in the 103.6 million.

While there’s no doubt that this growth was spurred by the global health pandemic closing theatres and keeping more people at home, it’s still exceeded even Disney’s wildest expectations. When the service first debuted in late 2019, Disney conservatively said it was hoping to hit between 60 and 90 million subscribers by 2024, and yet it blew past that number by the end of last year.

This puts Disney+ in third place among streaming services, behind the 800-lb gorilla of Netflix, which still boasts twice as many subscribers at 207.64 million, and Amazon Prime Video, which can claim 200 million subscribers thanks to the fact that its video service is a freebie that comes with every Prime subscription. In fact, it’s unclear how Amazon counts these numbers, so it could be including Prime members who have never even touched Amazon’s video app.

However, based on this growth, Disney is expecting to surpass Netflix by 2024, with between 230 and 260 million subscribers. Most analysts believe that Netflix has already neared its peak subscriber base, and that its growth will slow down significantly over the next few years.

Hulu, which is also owned by Disney, currently has 41.6 million subscribers, while HBO Max is at 44.2 million. Both these services are somewhat more hampered by being limited to the U.S., however.

What About Apple TV+?

As usual, Apple is releasing almost no useful information about the number of Apple TV+ subscribers, leaving analysts to attempt to read the tea leaves to come up with a number.

An estimate by Ampere Analysis put Apple TV+ at around 33.6 million subscribers at the end of 2019, while Statista estimated it had more recently hit 40 million.

Even if they’re accurate, however, the problem with these numbers is that analysts have absolutely no way of knowing how many paying subscribers Apple TV+ has. The estimates are inferred from Apple’s financial reports, but because of the way that Apple records its revenue for Apple TV+ it’s virtually impossible to know the difference between a paying customer and one who is getting a free year included with the purchase of a new Apple device.

You see, to keep its books straight and comply with legal financial reporting requirements, when a customer who buys a qualifying new Apple device claims their free year of Apple TV+, the bean counters actually take the normal cost of that Apple TV+ subscription away from the revenue earned from the iPhone, iPad, Mac, or Apple TV, and add it to the revenue from Apple TV+.

In other words, Apple records $60/year in revenue for every Apple TV+ subscription, whether the user is paying for it or not — it either comes from the user’s own wallet or it comes from the purchase price of their Apple device.

While this may seem a bit shady as it allows Apple to inflate its services revenue, it’s actually a legal reporting requirement under Generally Accepted Accounting Principles (GAAP), since to do anything else could be considered to be defrauding investors by incorrectly reporting earnings. In short, Apple has to take the cost/value of the included Apple TV+ subscription out of every eligible device it sells, in much the same way it would have to account for other discounts and promotions.

Looking at it another way, Apple isn’t technically giving away Apple TV+ for free, as the subscription price for those on the one-year promotion comes out of the profits from its hardware products — Apple earns $60 less for every iPhone sold where the user claims their free year of Apple TV+.

All the accounting aside, however, the real point is that it’s hard to measure the popularity of a service when most people aren’t actually voting for it with their wallets. Customers don’t have the option of saving $60 on an iPhone if they choose not to take advantage of Apple TV+, so from a consumer perspective, Apple is definitely giving away a free service, and even if it has 40 million subscribers, that doesn’t mean those subscribers consider it to be worth any more than what they’re already paying.

Further, Apple has repeatedly extended its free trials, likely keeping the number of subscribers higher than it would have otherwise been. With the advent of the Apple One bundle it’s also very likely that many subscribers are effectively still getting Apple TV+ at no extra charge alongside their other Apple services.

At the end of the day, however, the real question we should be asking is whether any of this really matters. Subscriber numbers are crucial to entertainment companies like Netflix and Disney, as that’s basically their whole business. Apple TV+ is in many ways still a side project for Apple, which can more easily afford to play the long game and grow it out slowly while still pouring billions of dollars into it from all the money it’s making in other areas like iPhone sales, the App Store, and other services. This could still very much a case of “slow and steady wins the race,” but we’re also not even convinced that Apple is running the same race. After all, it’s a company whose goal has always been more about being profitable and making great products than about dominating the industry.

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