‍👉 Background: After the success of Netflix, every media company, as well as non-media companies like Apple and Amazon, decided to launch their own streaming service. And so far, Apple has been pretty successful with the shows it's produced - from Ted Lasso to The Morning Show and Shrinking.

‍👉 What happened: AppleTV+ is reportedly losing more than $1 billion USD a year according to a new report by the Information. Get this: Apple has spent more than $5 billion USD a year on content since launching Apple TV+ in 2019, but last year, it cut its spending by around $500 million USD to reign in the costs.

‍👉 What else: AppleTV+ is supposedly Apple’s only non-profitable service. But, before you start crowdfunding for Apple, keep in mind Apple pulled in $391 billion USD in revenue last year. So AppleTV+ is more of a loss leader for tech behemoth.

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‍What's the key learning?

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‍💡A loss leader is a product or service sold at a loss to attract customers to a store or ecosystem. Apple TV+ is playing the role of a loss leader within Apple’s wider ecosystem of products and services.

💡Apple TV+ may not be profitable on its own, but it plays a role in enhancing the value of Apple’s broader offerings. It also drives revenue into Apple’s software division, alongside iCloud, Apple Music and the App Store. And this division is worth more than $26 billion in revenue for Apple in the last quarter alone — or 21% of its total quarterly revenue.

💡So this loss leader strategy is part of the classic playbook: lose a bit here, rake it in over there. But for Apple, the risk is ensuring that this loss leader doesn’t drag down its overall margins.