Why Apple TV Plus is 'still sputtering' as NBC's Peacock, Netflix subscribers soar

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The streaming wars are heating up, and the winners and losers are starting to emerge.

Comcast (CMCSA) reported quarterly earnings on Thursday, beating analyst estimates on both the top and bottom lines while also adding an impressive 11 million signups to its fledgling Peacock streaming service.

Peacock, which made its streaming debut on July 15, now has 33 million signups — on par with competitors like HBO Max (T), which reported nearly 40 million total subscribers in its most recent quarter.

Peacock’s growth is even more impressive considering the new additions came before “The Office” officially landed on Peacock on January 1, 2021. The service will also welcome WWE’s library in March.

A peacock is pictured outside NBC headquarters at Rockefeller Center in the Manhattan borough of New York City, New York, U.S., January 16, 2020. REUTERS/Carlo Allegri
A peacock is pictured outside NBC headquarters at Rockefeller Center in the Manhattan borough of New York City, New York, U.S., January 16, 2020. REUTERS/Carlo Allegri

To caveat, Peacock also has a free tier, making it nearly impossible to tell how many of the 33 million are paying subscribers or could be converted to paid subscribers.

Netflix (NFLX), which added 8.5 million subscribers in Q4, reigns supreme with over 203 million users worldwide. Meanwhile, Disney Plus (DIS) reached an equally impressive milestone of well over 86 million subscribers after its recent November 2019 launch.

So where does all that leave Apple (AAPL), whose streaming efforts have flown under the radar since launch in late 2019?

Apple ‘still spluttering vs. peers’

According to MoffettNathanson’s Q4 2020 SVOD Tracker report, which partnered with market research company HarrisX to poll the streaming preferences of 19,435 U.S. respondents between October and December, streaming penetration of U.S. households accelerated to 77% by the end of December — 500 basis points higher than December 2019’s level.

The top performers included Netflix, Amazon Prime Video (AMZN), Hulu and Disney Plus. Yet Apple TV Plus and HBO Max landed in the bottom pile by a small margin, according to the data.

Despite its slow start, HBO Max did grow 300 basis points in the quarter, suggesting that the streamer is beginning to gain traction amongst consumers. Meanwhile, interest in Apple TV Plus seems to be dwindling.

“We see Apple TV Plus as still sputtering vs. peers,” the note said — adding how Warner Bros.’ decision to air all of its 2021 moves on HBO Max, in addition to the platform’s improving content slate (which includes a mega “Sex and the City” revival), helped drum up further buzz.

HBO Max’s “Wonder Woman 1984”, which kicked off the unique release strategy, was viewed 2.25 billion minutes throughout its debut week, outpacing all other streaming programming in U.S. viewership, according to Nielsen.

“We wonder what Apple TV Plus does to stand out in an increasingly competitive and crowded field,” the note continued.

HBO Max’s “Wonder Woman 1984” outpaced all other streaming programming in U.S. viewership, according to Nielsen
HBO Max’s “Wonder Woman 1984” outpaced all other streaming programming in U.S. viewership, according to Nielsen

On Wednesday, Apple reported strong earnings powered by iPhone 12 sales with service revenue hitting a record high.

Still, Apple CFO Luca Maestri told analysts on the earnings call that Apple TV Plus was “immaterial” to the results for the period, as the performance of the streaming service largely remains unclear.

To make matters more difficult for the tech giant, it seems to have a freeloader problem with 62% of its subscribers signed up through a free promotional offer.

Currently, a free year of Apple TV Plus is gifted to buyers of its hardware devices with the hope of renewal. But according to MoffettNathanson’s report, 29% of those who signed up through a free offer said they do not plan to resubscribe once the promotional period expires.

To compare, 16% of Disney Plus users access the service through a promotional partnership with Verizon (VZ), whereas 23% of HBO Max subscribers access the service through AT&T’s bundles.

Alexandra Canal is a producer & entertainment correspondent at Yahoo Finance. Follow her on Twitter @alliecanal8193.

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