Streaming is a crowded and brutally competitive business, requiring big investments in content and a constant drumbeat of hits to keep subscribers coming back. For a company to succeed in the space, it needs not only an expansive library of great content but also a lot of cash for future content. Netflix (NFLX +0.12%), of course, fits the bill. But so does Apple (AAPL 2.03%). And Apple also has unique structural advantages: A complementary services business it can bundle with its Apple TV offerings and a more diversified and financially robust business that enables it to take bigger swings on content deals without changing the risk profile of the overall business.
Given how established Apple's overall business is, and how its streaming service is just one small portion of a thriving services business, the iPhone maker is arguably one of the few companies in the world that can treat streaming as a long game, not a quarter-to-quarter fight. Even more, I believe that it is finally putting some real weight behind its streaming business. And it's working.
This is not to say Netflix is in trouble. It is still the category leader, and its business appears to be firing on all cylinders. But Apple has a set of advantages that most streaming service rivals do not, and it is starting to use them more visibly.
Apple's TV show Severance was the most-awarded drama at the 2025 Emmy Awards. Image source: Apple.
Apple TV's momentum
Apple's services business, where Apple TV lies, has morphed into arguably the most important aspect of the investment thesis for Apple stock. The lucrative segment is the company's biggest growth engine, and it is becoming a larger piece of the overall business over time.
Capturing its importance to Apple's broader business, Apple's services revenue rose about 15% year over year in fiscal Q4 -- an acceleration from about 13% year-over-year growth in fiscal Q3 and faster than the company's 8% year-over-year growth in total revenue in fiscal Q4. And it is a high-margin business. In fiscal Q4, Apple's services gross margin was about 75%, compared to about 36% for products. Therefore, when this services segment grows faster than the overall company, it enhances Apple's overall profit profile over time.
Within its services business, Apple TV is now a major player.
Though Apple does not break out Apple TV's revenue or subscriber count, it has started to share more engagement-level signals. And they look good.
In a January 2026 press release about its services' growth in 2026, Apple said Apple TV "eclipsed all prior viewership records" in December 2025. The company also said Apple TV's total hours viewed in December rose 36% compared to the prior year, setting a record for monthly engagement.
In addition to its award-winning content being a driver of growth, several other catalysts are propelling the business higher.
First, Apple has an advantage when it comes to bundling. For instance, it offers a subscription called Apple One, which bundles Apple TV with up to five other Apple services for a lower price than if these subscriptions were paid for separately. This gives Apple TV more distribution, and it gives subscribers more reasons to keep paying.
NASDAQ: AAPL
Key Data Points
Then there are sports. Apple has been aggressively expanding its live sports content. And in October, Apple and Formula 1 announced a five-year partnership that will bring all F1 races exclusively to Apple TV in the U.S. beginning in 2026, including practice, qualifying, sprint sessions, and Grands Prix.
Sports rights, of course, are expensive and competitive. But Apple's balance sheet gives it enormous financial flexibility. At the end of fiscal 2025, Apple reported about $35.9 billion in cash and cash equivalents, plus about $96.5 billion in marketable securities. Net of its debt, the company's total cash and cash equivalent position was about $34 billion. In addition, the company generates nearly $100 billion in annual free cash flow. This kind of financial firepower likely helps Apple when it comes to its ability to keep investing, experimenting, and bidding for premium content.
Netflix still has the home-field advantage
Even with Apple's momentum, Netflix remains the standard in streaming. Boasting more than 300 million subscribers and reaching over 190 countries, it has the most recognized streaming brand and global scale. And, more importantly, it's focused; its business model is built specifically around streaming economics.
Showing how well the streaming giant is doing, Netflix's third-quarter revenue rose 17.2% year over year. And the company's third-quarter shareholder letter also pointed to multiple notable drivers behind its strong revenue growth, including membership growth, price increases, and increased advertising revenue.
NASDAQ: NFLX
Key Data Points
Advertising revenue, in particular, is an exciting catalyst for Netflix. While its advertising business is still small since it's only about three years old, it is growing fast.
"We are now on track to more than double our ads revenue in 2025 (still off a relatively small base)," the company explained in its third-quarter shareholder letter.
Clearly, Netflix is doing just fine.
Still, investors should keep in mind Apple's structural advantages, which could make Apple TV a bigger threat over time. Not only does the tech giant have more cash to invest in streaming, but it can also bundle its streaming service with other services. And it can make big strategic moves without significantly altering the company's overall risk profile.
Ultimately, Netflix has established a lead in streaming that should enable it to continue doing well. But investors should not dismiss Apple TV as a threat -- especially over the long term. It is starting to show measurable engagement momentum, and it sits inside a services engine that still appears to have plenty of runway.
