Could Apple TV+ disrupt the advertising market????
Is Apple TV+ costing itself Billions by trying to be a pay service instead of a free service that receives revenue from advertising? If you really dig into what can be made in the advertising game then the answer is yes IMO.
The Top 100 companies in the world spend $300 BILLION per year in advertising. $300 billion!!! Could Apple take a percentage of that? Absolutely. Will they though? That is another question.
I will use Anheuser-Busch(Budweiser) as an example. They spend around $4 billion per year in advertising of all forms. For the Super Bowl they spent $20 million on commercials. Another $20-30 million, possibly more, during the NFL regular season. The Super Bowl gets about 100 million viewers + whatever the streaming numbers are. A good majority of the regular season viewers are also watching the SB so I'll fold them into that number. Allowing for a few other variables, I'll say that their advertising for football is seen by 125 million. I don't know if that is their largest audience but I suspect it is.
That gets us to this point - $50 million for 125 million viewers.
I've seen estimates that 800 million people have Apple accounts on around 1.4 billion devices.
If Apple releases their content for free with 4 minutes of advertising do you think it is more likely to be seen rather than if it weren't free? The answer is likely yes but we don't know what those numbers would look like. If that number is significant, let's say 400 million watch the top rated shows, then what is a company like AB willing to spend per year to be seen by 400 million people compared to 125 million? Would A-B be willing to spend 1.25%, 2.5% or more of their yearly budget to advertise on Apple TV+ shows where they will probably find a completely different demographic? Seems like a no-brainer IMO.
Now the question becomes, how much advertising will Apple customers put up with if they enjoy a show? Would they do 6 minutes broken up into :30 segments or is the number lower? My research says that the lower you can go the more you can maximize revenue. I think Apple can produce $7.5-33 Billion in revenue on a yearly basis without even approaching a greedy level. Unless you think taking a small portion of $300 billion is greedy. I think there is a happy medium there at about 4 minutes of advertising.
Or we can hope that 50 million people eventually pay $10 a month for about $6 billion in revenue.
That is why I believe Apple should release it free for the first year and see which way the wind is blowing.
Am I crazy?
I'm sure I missed several things so please let me know if I did.
The Top 100 companies in the world spend $300 BILLION per year in advertising. $300 billion!!! Could Apple take a percentage of that? Absolutely. Will they though? That is another question.
I will use Anheuser-Busch(Budweiser) as an example. They spend around $4 billion per year in advertising of all forms. For the Super Bowl they spent $20 million on commercials. Another $20-30 million, possibly more, during the NFL regular season. The Super Bowl gets about 100 million viewers + whatever the streaming numbers are. A good majority of the regular season viewers are also watching the SB so I'll fold them into that number. Allowing for a few other variables, I'll say that their advertising for football is seen by 125 million. I don't know if that is their largest audience but I suspect it is.
That gets us to this point - $50 million for 125 million viewers.
I've seen estimates that 800 million people have Apple accounts on around 1.4 billion devices.
If Apple releases their content for free with 4 minutes of advertising do you think it is more likely to be seen rather than if it weren't free? The answer is likely yes but we don't know what those numbers would look like. If that number is significant, let's say 400 million watch the top rated shows, then what is a company like AB willing to spend per year to be seen by 400 million people compared to 125 million? Would A-B be willing to spend 1.25%, 2.5% or more of their yearly budget to advertise on Apple TV+ shows where they will probably find a completely different demographic? Seems like a no-brainer IMO.
Now the question becomes, how much advertising will Apple customers put up with if they enjoy a show? Would they do 6 minutes broken up into :30 segments or is the number lower? My research says that the lower you can go the more you can maximize revenue. I think Apple can produce $7.5-33 Billion in revenue on a yearly basis without even approaching a greedy level. Unless you think taking a small portion of $300 billion is greedy. I think there is a happy medium there at about 4 minutes of advertising.
Or we can hope that 50 million people eventually pay $10 a month for about $6 billion in revenue.
That is why I believe Apple should release it free for the first year and see which way the wind is blowing.
Am I crazy?
I'm sure I missed several things so please let me know if I did.