Disney Challenges Big Tech: A Quest for Better App Store Deals
Staff Editor
3 min read
Disney CEO Bob Iger is sending a clear message to tech giants like Apple and Google: the time has come for a better deal. Iger expressed his frustration over what he perceives as an unfair financial arrangement during an investor conference this week. The core of his complaint? Disney is relinquishing too much revenue to these tech companies, thanks to the fees associated with distributing its streaming services, such as Hulu and Disney+, through third-party app stores.
While Iger acknowledges there are advantages to using third-party platforms, he is quick to highlight the significant costs tied to these deals. The terms can vary depending on the platform, with Apple charging video companies like Disney 15% of revenue for signups made within its ecosystem. Roku, another prominent player, demands fees for customer signups on its devices and might even take a slice of the ad inventory from these services. Clearly, this isn’t just a drop in the bucket; it’s a substantial financial commitment that affects Disney’s bottom line.
Interestingly, Netflix has taken a different approach by opting to distribute largely through its own channels, thereby sidestepping many of these third-party fees. This strategy hasn’t hurt Netflix’s growth and has likely contributed to healthier profit margins. For tech companies like Apple, the revenue generated by app stores and in-app purchases is a significant part of their business model. Apple, for one, has been emphasizing to investors the critical role that its “Services” sector, including the App Store, plays in its future growth.
However, all is not lost for Disney. Regulatory bodies around the world are scrutinizing Apple’s App Store policies, subjecting them to increasing pressure to make concessions. While Apple has been reluctantly making some changes, it remains to be seen whether these adjustments will include a reduction in fees for industry behemoths like Disney. If regulators have their way, a shift towards more favorable terms for content providers could be on the horizon.
Disney’s predicament underscores a broader issue within the tech and entertainment industries: the balancing act between leveraging third-party platforms for distribution and maintaining a sustainable revenue model. As more companies scrutinize their expenditures and look for ways to optimize their revenue streams, the pressure on tech giants to adjust their fee structures will only intensify.
Bob Iger’s call for a better deal is not just a plea for Disney but a reflection of a growing sentiment among content providers. They are tired of forking over substantial portions of their revenue to tech companies for the privilege of using their platforms. It’s a compelling argument that will undoubtedly resonate with many in the industry and could potentially lead to significant changes in how these deals are structured in the future.
The ball is now in the court of tech companies like Apple and Google. Will they hold their ground, or will they find a way to appease giants like Disney? Only time will tell, but one thing is certain: the conversation around app store fees and distribution costs is far from over.
