Matt Johnston
Apple is said to be working on a TV subscription service that will cost between $20 and $40 per month and includes "about 25 channels, anchored by broadcasters such as ABC, CBS, and Fox," according to The Wall Street Journal.
The Baird Equity Research note calculates that if Apple can capture 10% of the U.S. broadband households, Apple "could generate $4 billion of annual service revenue, though we suspect the penetration could go much higher, with a significant global opportunity as well."
While 46% of consumers surveyed by Baird are looking to cut "or shave" their cable cord, far fewer - 15% - have actually made any move to ditch their cable subscription service.
An Apple TV subscription service "could be the straw that breaks the camel's back," according to Baird, and Apple could further increase revenue through added sales related to the new service such as hardware sales or iTunes downloads.
Globally, Apple could eventually generate $30 billion of annual revenue if the company is able to capture 10% of the approximately 90 million broadband households.
The traditional television industry is ripe for disruption, especially among millennials, who are watching 40 minutes less traditional TV than they were two years ago, according to BI Intelligence.
The change in traditional TV watching habits is largely due to alternative video-on-demand devices such as the Apple TV, Roku, and Netflix. If Apple can capture even a fraction of this market, Baird points out that Apple stands to increase its annual revenue significantly.