Apple has more subscribers than other leading online video services combined. With over a billion paid subscriptions, it has gained over 150 million in 12 months, to nearly double the number it had three years ago. Apple generated $21.2 billion in revenue from services in the second quarter of 2023, at a cost of $6.2 billion. The secret of its success is not so much movies or television programmes as the overall Apple ecosystem.

Over a quarter of the revenue received by Apple was for services, which are more profitable than products, with a 70% gross margin.

Apple rarely releases information about how many paid Apple TV+ subscribers it has, but some analysts put it at around 40 million. Many more may have access to the service through promotions, as it is available free for a year with the purchase of new Apple devices.

With quarterly net income of approaching $20 billion, Apple does not need to make money directly from Apple TV+. Its value is as part of a package of services that support and differentiate the Apple ecosystem.

Apple has 2 billion active devices worldwide. The company no longer reports unit sales for products, but quarterly sales of for the iPhone were worth just under $40 billion, or almost half its revenue.

Services accounted for almost as much as its Mac, iPad, wearables, home products and accessories sales combined.

The company’s services portfolio includes its app store, iCloud, Music, Fitness+, Pay, Apple Card and Apple TV+.

Tim Cook said that the company set record revenues for video, but the company did not break this out to a figure. He described Apple TV+ as “a spectacular showcase of imaginative storytelling.”

Luca Maestri, the chief financial officer of Apple, told analysts that the company hopes to convert free users to paying subscriptions.

“I would say the biggest opportunity is that we know that there’s a lot of customers that we have that are very familiar with our ecosystem. They are engaged in the ecosystem,” he said. “But still today, they’re using only the portion of the ecosystem that is free. And so we think that by offering better content and more content over time, we’re going to be able to attract more of them as paid customers.”