Tech giant Apple Inc AAPL recently announced a price increase for its streaming customers, taking its AppleTV+ subscriptions from $9.99 per month to $12.99 per month, its first price increase since 2023.
Deepwater Asset Management Managing Partner Gene Munster breaks down what the price increase could mean.
Gene Munster On Apple’s Price Increase
The price increase for Apple’s streaming segment represents a “small example of a big opportunity” for the tech giant, Apple bull Munster wrote in a recent blog post.
Munster says that Apple is looking to increase its revenue per device through items like subscriptions and price increases for services and hardware.
“I believe investors will increasingly focus on that metric as a barometer for the health of the business,” Munster said.
He noted that the price increase for AppleTV+ could add $430 million in “high margin revenue,” or a rise of 0.1% of next year’s expected revenue.
Apple doesn’t break out its monthly subscribers. Munster estimates 60 million paid subscribers, with 65% receiving a discount. Munster’s estimate is an average monthly cost of $6.50 per month per subscriber.
“Apple users get a ton of value from their devices on a daily basis. Inching up average revenue per device per day will be two-thirds led by services and one-third led by hardware price increases,” he noted.
He compared the price change and new focus to the chapters that Apple has gone through as a company over the past 20 years.
“The first was the move to a mobile device company. The second chapter was higher margins through services. The third could be inching up average revenue per user.”
Munster said the new focus comes as Apple users continue to get a lot of value from their devices, and the company has an opportunity to introduce new services and raise the prices of existing ones.
“Over the next five years, I believe this will be Apple’s growth playbook, getting more aggressive on pricing because when consumers break it down, they are only paying pennies a day to have their lives run on Apple.”
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Apple Streaming: Big On Awards, Ecosystem, Lower on Profits
Apple, which reported losses $1 billion annually on AppleTV+, has gone all in on big-budget movies for theaters and to stream on the platform. While this has translated into award nominations and wins, the platform has yet to turn a profit.
“The basic strategy of Apple TV+ business is to invest lots of money and win lots of awards. So far that is exactly what they are doing. I expect the losses to end in a few years,” Munster said.
He noted that Apple could be looking to reduce losses through the price increase and lowering content costs in the future.
“I believe Apple’s intent is to gradually close the gap between Apple TV+ expenses and revenue, turning what has been a negative-margin venture into a profitable one over time.”
The price increase from Apple comes as the streaming platform has added sports rights like Major League Soccer as part of a 10-year exclusive deal and Major League Baseball Friday Night games through 2028.
Apple earned 81 Emmy Award nominations in July, including 27 for hit series “Severance” and 23 for “The Studio.” The platform is also nearing a return of “Ted Lasso,” one of its top series of all time.
The price increase also came ahead of the streaming premiere of “F1,” the record-breaking film from Apple. The film, which will likely hit the streaming platform in late September or October, grossed $185.9 million domestically and $603.4 million worldwide.
“F1” is the highest-grossing Apple film ever, ranking 11th domestically and seventh in the world for 2025 box office gross currently.
Apple’s price increase also comes ahead of a rumored ad-free plan. Adding an ad-supported plan after hiking prices by 30% could prompt subscribers to switch to the lower-priced plan, potentially benefiting Apple more if advertising rates are high.
AAPL Price Action
Apple stock traded at $227.71 on Monday, within a 52-week trading range of $169.21 to $260.04. Apple stock is down 6.6% year-to-date in 2025.
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