Apple TV+ has had a slow start, but it's way too early to write off the service as a failure, according to JPMorgan analysts.
Apple doesn't disclose subscriber numbers for TV+, which launched last November, but press reports have pegged the subscriber base at between 10 million and 30 million, the majority of which aren't paying subscribers.
Apple has offered TV+ for free to buyers of Apple devices, and according to JP Morgan analyst Samik Chatterjee, activation has been "low" even among users eligible for the free promotion.
By comparison, Disney+ has racked up more than 54 million global subscribers and is already in 25% of U.S. broadband homes, according to a recent report by Parks Associates. Steve Nason of Parks Associates noted that its "broadly appealing content" has made Disney+ a current staple in many U.S. homes, just six months after its launch.
Apple TV+ appears to have a small base of dedicated subscribers, and Apple's challenge now is to expand beyond that group, according to Nason. According to Parks' research, Apple is in 10% of U.S. broadband homes, while Disney+ is already in 25% of those homes.
Limited adoption of Apple TV+ was driven by its small and lackluster content library at launch, but Apple's massive bank account means it can "spare no expense" in establishing TV+ as a serious contender in content streaming, Chatterjee noted.
Apple recently inked a deal with Sony Pictures to distribute Tom Hanks's big-screen World War II-era movie "Greyhound," for a reported $70 million. It's also taking pitches from major Hollywood studios to license classic movies and shows, according to Bloomberg.
Apple is reportedly spending as much as $6 billion to build out TV+ content, eclipsing the spending of competitors such as Hulu. After launching with just eight titles, Apple's library has grown to 28 titles, and IMDB user ratings for its newer titles versus its older ones have also shown improvement.
Chatterjee expects Apple TV+ to accumulate 100 million paying subscribers by fiscal 2025.
Apple shares are up 7% year to date.