Recent moves that could make Apple TV important (Part 1 of 2)

+2.81%
Upside
173
Market
178
Trefis
AAPL: Apple logo
AAPL
Apple

Allowing easy access to shows like CBS’s 60 Minutes or Disney’s Desperate Housewives through iTunes and Apple TV could change the TV landscape.  The WSJ reported of preliminary discussions between Apple and media content providers like Disney, CBS and Time Warner, that could lead to Apple offering a wider range of TV shows through its iTunes platform.

We think there are five big implications for Apple, media companies (Disney, CBS) and cable/satellite companies (Comcast, DirecTV) if Apple’s proposal gains traction.  Below are the first two implications:

1.  Apple drives more sales of TV shows through iTunes

Relevant Articles
  1. Down 10% This Year, Will Gen AI Tools Help Apple Stock Recover?
  2. Down 5% Over The Last Month, Will Strong iPhone Sales Help Apple Offset Mac Headwinds In Q1?
  3. After Over A 40% Rally In 2023, Will Antitrust And iPhone Issues Hurt Apple Stock?
  4. Up 45% Since The Beginning Of 2023, Where Is Apple Stock Headed?
  5. Up 34% This Year, Will Apple Stock Rally Further Following Q4 Results?
  6. Will New iPhones Help Apple Stock Offset A China Slump?

We believe that Apple currently sells an order of magnitude fewer TV shows through iTunes than it does songs.  We estimate that iTunes will have sold over 100 million TV shows in 2009 compared to about 2.6 billion songs.

By increasing the Trefis forecast to 2 billion TV shows on iTunes here, you can see how Apple’s stock would be impacted if TV show demand were to be more comparable to song demand.

2.  Apple TV gains wider adoption

We estimate that Apple has sold about 5 million Apple TVs this year and fewer than 10 million since being introduced in 2007.  In comparison, there are about 115 million TV households in the US representing a huge opportunity for Apple it succeeds in revolutionizing TV.

How much would the stock be impacted if demand for Apple TV rose to 100 million units by the end of the Trefis forecast period?

A. 1% (~$2)

B. 7% (~$16)

C. 13% (~$30)

D. 20% (~$47)


Make a selection above and increase the forecast to 100 million to see the answer.

Tomorrow’s note will include three more implications focusing on the media, cable and satellite companies.