In the world of streaming wars, Disney CEO Bob Iger has tossed a proverbial stone into the placid lake of Big Tech. Addressing an investor conference recently, Iger didn’t pull any punches when he vocalized his dissatisfaction with the current revenue-sharing model between Disney’s streaming services—such as Hulu and Disney+—and the tech giants that distribute them, namely Apple and Google. According to Iger, the financial arrangement is heavily skewed in favor of these third-party app stores, costing Disney a significant chunk of change.
Disney’s strategy diverges somewhat from that of Netflix, which has managed to grow its empire while sidestepping many of these third-party fees. Unlike Netflix, Disney relies significantly on distribution through app stores. For example, Apple charges video companies like Disney a hefty 15% cut for signups made within Apple-distributed apps. Roku, another player in the connected TV space, not only charges a fee for acquiring customers through its devices but also demands a share of ad inventory from these streaming services. These costs add up, particularly when you are trying to keep those subscription prices competitive and your profit margins healthy.
Apple, for its part, has a vested interest in maintaining its revenue from the App Store. The company has frequently highlighted the growth of its “Services” sector, with the App Store being a significant contributor. Apple can rake in up to 30% of revenue generated by in-app purchases and signups, a considerable incentive to keep their current model intact. However, these policies have come under increasing scrutiny from regulators around the globe, pressuring Apple to revise its revenue-sharing practices. Regulatory winds might just blow in Disney’s favor, forcing Apple to consider more lenient terms for their high-value partners.
Notably, Disney doesn’t necessarily have to pack up its streaming services and exit these third-party ecosystems to save money. With regulatory bodies circling, Apple has already started making minor concessions to its App Store policies. While the specifics remain under wraps, there’s a sliver of hope that one of these changes could include a reduced cut for major players like Disney. Such a development would be a win-win; Disney retains its distribution channels without sacrificing a significant share of its revenue, and Apple keeps a major content provider on its platform.
Just when it seemed the streaming landscape was settling into a steady rhythm, Disney’s vocal stance serves as a reminder that the battle for revenue and margins is far from over. The entertainment giant’s discontent could herald a broader shift in how tech companies and content providers interact financially. And who knows? In the ever-evolving world of tech and media, today’s discontent could be tomorrow’s opportunity for innovation and growth. As Disney and its competitors continue to navigate these waters, we’ll be watching with our popcorn in hand, ready for the next plot twist.
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