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Apple (AAPL) Deepens Focus on Streaming, Movie Business

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Apple (AAPL - Free Report) is deepening its focus on expanding its footprint in the entertainment business with plans to spend $1 billion on producing movies. Per Bloomberg, the iPhone maker has already approached movie studios to ink partnerships that will help it to release films in theaters.

Apple’s latest move reflects its strategy to attract subscribers to its streaming service, Apple TV+. It is working with prominent filmmakers like Martin Scorsese, Matthew Vaughn and Ridley Scott to improve content for the service.

Apple TV+, despite having fewer subscribers than Netflix (NFLX - Free Report) and Disney (DIS - Free Report) , has been gaining recognition due to its impressive content portfolio that includes Ted Lasso. Its animated movie The Boy, the Mole, the Fox and the Horse won an Oscar for Best Animated Short Film this year. Last year, Apple won three Academy Awards for CODA.

Apple’s impressive run at the Academy Awards has been instrumental in driving recognition of Apple TV+ in the saturated streaming market currently dominated by the likes of Amazon (AMZN - Free Report) , Netflix and Disney+.

Apple Inc. Price and Consensus

Apple Inc. Price and Consensus

Apple Inc. price-consensus-chart | Apple Inc. Quote

Apple TV+ is also expanding into different genres like live sports. Apple TV+ is set to stream Friday Night Baseball, a weekly doubleheader, beginning Apr 7. Moreover, MLS Season Pass, a subscription service, is now available on the Apple TV app in more than 100 countries and regions.

Apple TV+ Popularity to Benefit Services Business

The growing popularity of Apple TV+ and services like Fitness+ have been beneficial for Apple’s Services business, which has become a major revenue-generating source in recent times.

The Services portfolio currently has more than 935 million paid subscribers and accounted for 17.7% of sales in the fiscal first quarter. Services revenues increased 6.4% from the year-ago quarter to $20.77 billion.

For the fiscal second quarter, Services revenues are expected to grow year over year despite challenging macroeconomic conditions, as well as weakness in digital advertising and gaming.

Apple shares have outperformed the Zacks Computer and Technology sector in the past year. While AAPL shares have declined 8.7%, Netflix, Disney and Amazon shares have declined 12.7%, 32% and 40.6%, respectively.

The Zacks Consensus Estimate for Apple’s fiscal second-quarter earnings has increased by a penny to $1.44 over the past 30 days.

This Zacks Rank #3 (Hold) company expects fiscal second quarter’s year-over-year revenue growth to be similar to that of the December (fiscal first) quarter due to unfavorable forex. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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