‘Severance’ pay: Why Apple TV+ is worth losing $1 billion a year

There’s more to life than money, and heaven knows Apple isn’t short of a dollar or two. So when I hear that the company’s TV+ streaming service is losing $1 billion a year, my first reaction isn’t shock, but intrigue. Is TV+ worth all that lost cash? On reflection, I think it is.

At the time of writing, there’s considerable excitement in the Price household ahead of the Severance S2 finale. By the time you read this article, that excitement will have been replaced by other emotions: sadness; loss; confusion about the relevance of those goats; a deep sense of satisfaction at a story (hopefully) well told; anger at structural missteps and (potentially) unresolved plot threads; and exasperation at the inevitable cliffhanger. But above all, we will be counting down the days—hopefully not years—until the third season.

Severance, by any metric, has been a hit. Despite the seemingly niche premise, the show is getting plenty of viewers: in February Deadline reported it had logged 589 million minutes viewed in the U.S. and at one point ranked #4 on Nielsen. We already know it’s surpassed Ted Lasso as the most-watched series in Apple TV+ history, but those are impressive numbers for a show on any platform.

Unlike most high-viewership shows, it’s also almost universally liked (with the caveat that quite a few people think the second season hasn’t been as good as the first). Even accounting for that slight dip it still has a 96 percent overall critic rating on Rotten Tomatoes, not to mention 14 Emmy nominations. It gets people talking around the water cooler and has its own subreddit. The Guardian calls it a cultural juggernaut.

If you’ve seen the show and noted its production values and austerely sumptuous set design, you won’t be surprised to hear that all this success and adoration comes at a cost. Severance is one of the most expensive TV projects ever commissioned, with costs reportedly exceeding $20 million per episode.

Apple has spared no expense, a seeming trend with Apple TV+ content. Overall, it’s estimated by The Information that Apple is losing $1 billion a year from its streaming business.

That’s a lot of money, and if this was any other company the alarm bells should be sounding. But since we’re talking about Apple, I’ll say two things: the company can afford it and it’s totally worth it.

Apple doesn’t run ads on the TV+ platform, at least not yet, so you can’t really ascribe revenue directly to one show or another. (Product placement could be a direct source of revenue, but TV+ shows tend to plug Apple’s own products rather than taking money for plugging those by other companies, and Severance doesn’t have any obvious product placement at all.)

Severance was never going to be a profitable project in any easily definable way. But it definitely generates money, principally by being such a cultural behemoth that people sign up to TV+ in order to join the conversation. It’s been suggested that the show has earned Apple $200M in new sign-ups, and while I’d serve a pinch of salt with that figure, it gives us a ballpark sense of how important a tentpole hit can be to a streaming platform.

But Severance and other breakout TV+ hits are worth far more to Apple than the money they bring in. For one thing, they are part of the pivot I’ve written about repeatedly over the past couple of years, the process by which the company moves away from making most of its money from selling iPhones and into selling other things to iPhone owners. A person owning an iPhone makes them more susceptible to paying for things like TV+ (and Apple Music, Arcade, Fitness+, and so on), but the reverse is also true: a person who likes Severance is more likely to at least consider buying an iPhone.

Like the iPod in the early 2000s, a streaming hit can act as bait for the entire Apple ecosystem. Spending $20M on an episode is worth it if only a few hundred thousand people watch that episode and end up as lifelong Apple customers.

Apple is more than a company that designs and sells phones and computers. It’s a lifestyle brand, and its fortunes depend on being perceived in a particular way. If it starts to be perceived as a bullying monopolist or a hyperbolic promise-breaker then that damages its image and its ability to resonate with customers. And, conversely, if a few successful TV shows can make Apple seem charming and folksy (Ted Lasso), funny and rebellious (Bad Sisters), cultured and literate (Pachinko), or cynical and flatulent (Slow Horses), or weird and smart (Severance) then that buys priceless reputational benefits.

More broadly, Apple stands to benefit simply by bringing good art into existence. The company worked this angle to a certain extent when the TV+-distributed movie CODA won three Oscars, and I found its attempt to horn in on the plaudits mildly distasteful since the film had been made and even premiered at Sundance before Apple got involved. But with shows like Severance, Apple can rightly claim to be a cultural force for good.

Speaking to Variety last week, Netflix CEO Ted Sarandos said he was confused by Apple TV+ and didn’t really see the point. “I don’t understand it beyond a marketing play,” he said. “But they’re really smart people. Maybe they see something we don’t.” Netflix doesn’t have a wider brand ecosystem like Apple, so of course Sarandos doesn’t understand. If you’re Netflix, you measure the success of a show by the number of subscriptions it drives versus the money it costs. But when you’re in the reputation business like Apple, you get to play a longer game.

That’s not to say that Apple will play a longer game. Last week it was reported that the company intends to slash its TV+ budget. I hope that’s not accurate. Because there’s more at stake than money. Also Severance is a great show and I don’t want it to get canceled before I find out about those goats.

Welcome to our weekly Apple Breakfast column, which includes all the Apple news you missed last week in a handy bite-sized roundup. We call it Apple Breakfast because we think it goes great with a Monday morning cup of coffee or tea, but it’s cool if you want to give it a read during lunch or dinner hours too.

Trending: Top stories

Future iPhones might ditch the USB-C port. Good.

Apple Intelligence isn’t just bad, it’s making Apple worse, reckons the Macalope.

Is Siri really that bad? Yes, yes it is. Which might be why Apple has reportedly ousted the Siri boss.

This year’s WWDC keynote will be must-see Apple TV.

Apple Watch SE 3 or 11e? Why following the iPhone is the wrong strategy.

Your iPhone’s Action button is surprisingly powerful–here’s everything it can do.

iPhone 16e Speedtest results show how impressive Apple’s CI modem is.

EU orders Apple to open up iOS connectivity features.

Podcast of the week

The second part of Apple’s M4 Mac rollout happened with the release of the M4 MacBook Air and the new Mac Studio. We review them in the latest episode of the Macworld podcast.

You can catch every episode of the Macworld Podcast on Spotify, Soundcloud, the Podcasts app, or our own site.

Reviews corner

• Codeweavers CrossOver for Mac review: One of the simplest ways to run Windows apps on a Mac.
• Surfshark One review: Impressive antivirus plus a reliable VPN service.

The rumor mill

This iOS 18.4 feature confirms: Apple is working on something big.

Apple’s first foldable iPhone could cost more than the priciest iPad Pro.

The rumored iPhone 17 Air is a trial run for phones with zero ports. Something which the EU has confirmed would be completely legal.

New leak corroborates a major iPhone redesign this year.

In a ‘twist,’ Apple has two new Mac displays in the works.

Software updates, bugs, and problems

New Mac phishing attack causes fake freezes to nab your Apple ID password.

Apple Passwords bug left users vulnerable to phishing attacks for three months.

There’s a firmware update for Apple’s new MagSafe charger (but not the old one).

iOS 18.4 beta 4 is out now, but the new Siri may not arrive until next year.

And with that, we’re done for this week’s Apple Breakfast. If you’d like to get regular roundups, sign up for our newsletters, including our new email from The Macalope–an irreverent, humorous take on the latest news and rumors from a half-man, half-mythical Mac beast. You can also follow us on Facebook, Threads, Bluesky, or X for discussion of breaking Apple news stories. See you next Monday, and stay Appley.