Apple Goes Full Netflix: The 'Severance' Deal Reveals Its Next Big Bet

Decades ago, when Netflix Inc (NASDAQ:NFLX) launched its streaming service, the company relied on established movie and television studios for content. Today, Netflix is raking in profits with its own, self-produced content.

Apple Inc (NASDAQ:AAPL) appears ready to take its unprofitable streaming segment in the same direction with a move that Wall Street may be undervaluing.

Apple Acquires ‘Severance’

"Severance" is one of Apple TV’s top-performing series, and the technology giant is betting big on making it the flagship of its original efforts.

Apple Studios acquired "Severance" rights and intellectual property from Fifth Season in a deal valued at around $70 million, as reported by Deadline.

After the acquisition, Apple Studios will become the in-house studio with Fifth Season moving to executive producer.

"Severance" has completed two seasons and has plans for at least four more, with a third set to start filming this summer. The acquisition also has Apple eyeing an expansion of the "Severance" universe for more content.

The series was nominated for 27 Emmys at the 2025 Emmy Awards and won eight trophies, making it one of the most-awarded Apple streaming titles to date.

Apple has already locked in a fourth season of "Severance" and that is the current decision. As for a potential fifth season, the report said it would be up to the show's creators, including actor Ben Stiller.

While a fifth season may not be in the cards, the show creators are open to the ideas of a prequel, spinoffs and international versions of the hit show, all items that could expand the universe and help create revenue for Apple Studios and its streaming efforts.

Season 2 of "Severance" was not profitable for Fifth Season. With the sale to Apple, the studio might turn a profit on its efforts.

With the purchase, Apple may be betting on increased viewership and additional content in future years. The show has seen its viewership double from season one to season two. The report said that if viewership grows and costs remain unchanged, the show could turn profitable in season 3.

Apple Streaming Efforts Ramp Up

Apple launched its AppleTV+ streaming service in 2019 and the segment has been unprofitable and mainly supported by high acquisition costs of content from others, with funding provided by the technology giant's cash flow from other profitable ventures.

Since launching, many of Apple's biggest hits have come from other movie and television studios. This leads to Apple paying large amounts of money for content and also sees Apple left with less negotiating power for season renewals, spinoffs and more content.

Apple Studios also creates other content for Apple's streaming platform, including "Your Friends and Neighbors," "Stick," "Sugar," and "Palm Royale." The studio was also responsible for the blockbuster "F1," which grossed $189.6 million domestically and $654.5 million worldwide, ranking ninth worldwide in 2025.

The report says Apple will still license content from other studios going forward, but it might acquire less and focus on securing the best content, relying on its own studio for top-tier content and ramping up content volume.

Deadline previously reported that Netflix paid 20% more for content produced by outside studios in 2019. The company has been able to increase its content output at the same cost by producing movies and shows in-house. Apple looks ready to make the same move.

Right now, Apple pays the full series cost upfront, along with a markup on the price it pays the company from which it acquires content. While this makes content profitable for companies licensing to Apple, it has hurt Apple's chances of making its streaming platform profitable.

Netflix has become the poster child in the streaming sector, while others have tried to balance boosting content and subscribers and also work towards profitability. While Apple has been able to fund its streaming through operations, the company now looks to improve results, which include reported annual losses of more than $1 billion on streaming.

With the acquisition of "Severance," more new content and a growing library of live sports, Apple's streaming segment is likely being undervalued by investors.

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