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Hollywood writers' strike could lead to difficult times for Apple TV+, but Apple can handle it

Apple TV+

Apple TV could suffer from an impending Hollywood writers' strike due to a small library and lack of unscripted content, but the company can easily weather the storm.

Hollywood is preparing for a potential writers' strike that might start on May 1 after the Writers Guild of America West and East members authorized a strike earlier in April. A strike isn't guaranteed, but media companies are making preparations since the last strike over a decade ago that further fueled reality television lasted for 100 days.

Analysts believe a strike would affect Apple, more than other companies, according to Business Insider. The company has focused on original films and series with A-list celebrities in a "quality over quantity" strategy.

But that has resulted in a smaller content library than rivals, and Apple TV+ has fewer scripted and unscripted titles. Apple also doesn't produce a lot of reality TV shows, which is part of the backup plans from Hollywood executives to produce content during a writers' strike.

A lack of fresh content due to a strike may also result in a drop in subscribers. "One hundred percent, it will impact churn," Michael Pachter, a media and entertainment analyst who serves as managing director for equity research at Wedbush Securities, said.

Although it's uncertain how long a strike may run, Pachter said it could reduce the number of new productions by 25% in 2023 if it lasted three months. However, Pachter also said Apple should be fine since it doesn't primarily rely on Apple TV+ for revenue.

"They're building a long-term brand of Apple TV+, which is something apart from all their devices and their cool software. And they're in the early innings," Pachter said, adding: "I think they literally have a 100-year vision — not worried about making a quarter."

Apple's Services business generated $20.77 billion in revenue in the first quarter of 2023, which includes Apple TV+, iCloud, and other products. And that was a drop in the bucket of its overall revenue of $117.15 billion.

"Apple can just as easily — more easily than almost any of the streamers — take a pause," Alvin Lieberman, a professor and executive director of the entertainment, media, and technology program at New York University's Stern School of Business, said.

"If it turns out that they really have a wasteland in front of them for, let's say, 30, 60, 90 days, it would not damage their P&L," he continued. "It would not damage the perception that people have of Apple TV+."