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Tim Cook, chief executive officer of Apple Inc., smiles while speaking about Apple TV+ during an event at the Steve Jobs Theater in Cupertino, California, U.S., on Tuesday, Sept. 10, 2019.
David Paul Morris | Bloomberg | Getty Images

Apple claimed its TV+ service had less than 20 million subscribers in the U.S. and Canada as of July, allowing it to pay behind-the-scenes production crew lower rates than streamers with more subscriptions, according to the International Alliance of Theatrical Stage Employees, a union that represents TV and movie workers who perform jobs like operating cameras and building sets.

Apple has never revealed subscriber numbers for its Apple TV+ streaming service, which launched in the fall of 2019. Analysts are reluctant to offer estimates, but many say that its scale pales in comparison to services like Netflix, which claimed 209 million subscribers as of Q2, and Disney+, which claimed 116 million.

The fact that Apple can pay a discounted rate despite being the most valuable publicly traded company in the world highlights some of the issues facing Hollywood workers as streaming supplants linear TV and movies, and is raising ire among union members who are deciding whether to strike for better pay and working conditions.

Under the current contract, high-budget productions intended for streaming can offer lower rates to workers if the streaming service has less than 20 million subscribers in the U.S. and Canada, which is determined on July 1 every year. Apple told IATSE that it had less than 20 million subscribers, a union spokesman said.

The union is currently in negotiations with the Alliance of Motion Picture and Television Producers over a new contract. Apple is a member of the alliance, but the alliance negotiates for all of its members, and doesn’t create carve-outs for specific companies, according to a spokesperson for the industry group.

An Apple spokesperson declined to comment on subscriber numbers but said the company pays rates in line with leading streaming services.

Under the current contract, productions made for streaming services are governed under less strict labor terms than traditional TV shows or movies because streaming profitability is “presently uncertain” and productions needed greater flexibility, according to a copy of the contract reviewed by CNBC.

But union leaders argue that streaming is no longer a particularly new form of media, and companies that bankroll streaming productions should pay rates closer to traditional media productions.

“Workers on certain ‘new media’ streaming projects get paid less, even on productions with budgets that rival or exceed those of traditionally released blockbusters,” an IATSE press release said this week, noting that negotiations had stalled.

IATSE is gearing up for a strike, its spokesman said, and ballots allowing the union’s 150,000 members to authorize a strike will be sent out on October 1.

While new media pay rates are one of the issues currently under negotiation, the most pressing issue is working conditions on set, including long working hours, which have gotten worse during the Covid-19 pandemic, the union spokesperson said. Celebrities and actors have started to post messages on social media supporting the IATSE union and potential strike.

Apple has reportedly spent up to $15 million per episode of shows like “The Morning Show” to try and bulk up its service with premium content. Apple also bundled free trials with the purchase of new phones or tablets, and those trials started expiring in July, forcing many users to decide whether it was worth $4.99 per month. Apple sold an estimated 206 million iPhones globally in 2020, which would amount to a lot of free trials.

NBCUniversal’s Peacock and ViacomCBS’ Paramount+ also have under 20 million subscribers, allowing them to ask for discounts on labor, the union spokesman said.

A ViacomCBS spokesperson said the company doesn’t break out Paramount+ streaming numbers. NBCUniversal didn’t have a comment by publication time.

Disclosure: NBCUniversal, which owns and operates Peacock, is also the parent company of CNBC.

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Nintendo profit plunges 69% as it cuts forecast for sales of ageing Switch console

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Nintendo profit plunges 69% as it cuts forecast for sales of ageing Switch console

Mario poses at the “SUPER NINTENDO WORLD” welcome celebration at Universal Studios Hollywood on February 16, 2023 in Universal City, California.

Rodin Eckenroth | Getty Images Entertainment | Getty Images

Nintendo on Tuesday cut forecast for Switch sales for its fiscal year ending March 2025 as demand wanes for its ageing console.

The Japanese gaming giant said it now expects to sell 12.5 million units of the Switch over the course of the period. That’s down from a previous forecast of 13.5 million units.

Nintendo has been contending with fading demand for its flagship Switch console, which is now more than seven years old.

Investors are waiting for news surrounding a successor to the Switch, which they hope will re-energize Nintendo’s gaming business. In the past, the company said that the Switch successor will be announced in its current fiscal year, which ends in March 2025.

Nintendo also cut full fiscal year forecasts for sales and operating profit. The company said it now expects sales of 1.28 trillion yen versus a previous forecast of 1.35 trillion yen. The operating profit outlook for the period was slashed from 400 billion yen to 360 billion yen.

Here’s how Nintendo did in its fiscal second quarter ended Sept. 30 versus LSEG estimates:

  • Revenue: 276.7 billion Japanese yen ($1.8 billion), compared with 273.34 billion yen expected.
  • Net profit: 27.7 billion yen, versus 48.06 billion yen expected.

Revenue fell 17% year-on-year. Net profit plunged just over 69% versus the same period last year.

Super Mario, Zelda boost fading

The Switch is Nintendo’s second best-selling console in history, behind the Nintendo DS. Despite the recent fall in sales, Nintendo has prolonged the console’s appeal for an extended period of time since its launch in 2017 by relying on its recognizable characters.

In its last fiscal year, Nintendo managed to reinvigorate sales of the Switch thanks to the the success of the “Super Mario Bros. Movie” and the highly anticipated release of the “The Legend of Zelda: Tears of the Kingdom” game, which underscored the appeal of its iconic characters.

But that effect is fading.

On Tuesday, Nintendo noted the boost that the company received in the first half of its last fiscal year, but said “there were no such special factors in the first half of this fiscal year, and with Nintendo Switch now in its eighth year since launch, unit sales of both hardware and software decreased significantly year-on-year.”

Sales of the Switch totaled 4.72 units in the six months ended Sept. 30, compared with 6.84 million units in the same period of last year.

In the face of falling sales, Nintendo has tried to license out its intellectual property for use everywhere, from movies to theme parks. A new Super Mario movie is slated for release in 2026.

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Meta extends ban on new political ads past Election Day

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Meta extends ban on new political ads past Election Day

Meta’s Mark Zuckerberg plans to visit South Korea, scheduling key meetings during the trip, according to a statement by Meta on Wednesday, which did not provide further details. Reportedly, Zuckerberg is anticipated to meet with Samsung Electronics chairman Jay Y. Lee later this month to discuss AI chip supply and other generative AI issues, as per the South Korean newspaper Seoul Economic Daily, citing unnamed sources familiar with the matter.

Alex Wong | Getty Images News | Getty Images

Meta extended its ban on new political ads on Facebook and Instagram past Election Day in the U.S.

The social media giant announced the political ads policy update on Monday, extending its ban on new political ads past Tuesday, the original end date for the restriction period.

Meta did not specify the day it will lift the restriction, saying only that the ad blocking will continue “until later this week.” The company did not say why it extended the political advertising restriction period.

The company announced in August that any political ads that ran at least once before Oct. 29 would still be allowed to run on Meta’s services in the final week before Election Day. Other political ads will not be allowed to run.

Organization with eligible ads will have “limited editing capabilities” while the restriction is still in place, Meta said. Those advertisers will be allowed to make scheduling, budgeting and bidding-related changes to their political ads, Meta said.

Meta enacted the same policy in 2020. The company said the policy is in place because “we recognize there may not be enough time to contest new claims made in ads.”

Google-parent Alphabet announced a similar ad policy update last month, saying it would pause ads relating to U.S. elections from running in the U.S. after the last polls close on Tuesday. Alphabet said it would notify advertisers when it lifts the pause.

Nearly $1 billion has been spent on political ads over the last week, with the bulk of the money spent on down-ballot races throughout the U.S., according to data from advertising analytics firm AdImpact.

Watch: Tech still investing big in AI development despite few breakout products.

Tech still investing big in AI development despite few breakout products

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Jeff Bezos and OpenAI invest in robot startup Physical Intelligence at $2.4 billion valuation

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Jeff Bezos and OpenAI invest in robot startup Physical Intelligence at .4 billion valuation

Sam Altman, CEO of OpenAI, attends the 54th annual meeting of the World Economic Forum, in Davos, Switzerland, January 18, 2024 (L), and Amazon CEO Jeff Bezos speaks during the UN Climate Change Conference (COP26) in Glasgow, Scotland, Britain, November 2, 2021.

Reuters

Physical Intelligence, a robot startup based in San Francisco, has raised $400 million at a $2.4 billion post-money valuation, the company confirmed Monday to CNBC.

Investors included Amazon founder Jeff Bezos, OpenAI, Thrive Capital and Lux Capital, a Physical Intelligence spokesperson said. Khosla Ventures and Sequoia Capital are also listed as investors on the company’s website.

Physical Intelligence’s new valuation is about six times that of its March seed round, which reportedly came in at $70 million with a $400 million valuation. Its current roster of employees includes alumni of Tesla, Google DeepMind and X.

The startup focuses on “bringing general-purpose AI into the physical world,” per its website, and it aims to do this by developing large-scale artificial intelligence models and algorithms to power robots. The startup spent the past eight months developing a “general-purpose” AI model for robots, the company wrote in a blog post. Physical Intelligence hopes that model will be the first step toward its ultimate goal of developing artificial general intelligence. AGI is a term used to describe AI technology that equals or surpasses human intellect on a wide range of tasks.

The news comes days after OpenAI launched a search feature within ChatGPT, its viral chatbot, that positions the AI startup to better compete with search engines like GoogleMicrosoft‘s Bing and Perplexity. Last month, OpenAI also closed its latest funding round at a valuation of $157 billion.

Physical Intelligence’s vision is that one day users can “simply ask robots to perform any task they want, just like they can ask large language models (LLMs) and chatbot assistants,” the startup wrote in the blog post. In case studies, Physical Intelligence details how its tech could allow a robot to do laundry, bus tables or assemble a box.

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