Disney Dares Big Tech: A New App Store Showdown
Staff Editor
3 min read
Disney CEO Bob Iger has a bold message for the titans of Silicon Valley: Apple, Google, and other tech giants need to renegotiate the financial terms of distributing Disney’s streaming services. Speaking candidly at an investor conference, Iger highlighted a significant concern: Disney is parting with too much of its revenue to third-party app stores. Disney’s streaming platforms, like Hulu and Disney+, primarily rely on these app stores for distribution, a strategy that has its benefits but comes at a steep cost.
While platforms like Netflix have circumvented some of these costs by pushing direct subscriptions, Disney remains tethered to third-party distributors. Apple, for instance, charges video companies such as Disney 15% of the revenue from signups made within apps distributed through its App Store. Meanwhile, Roku not only charges fees for customer signups but also demands a portion of the service’s advertising inventory. These arrangements differ from one platform to another, but the common denominator is a substantial financial outlay for Disney.
The financial relationship between Disney and the app stores is a microcosm of a broader trend in the tech industry. For companies like Apple, the revenue generated from their “Services” division, which includes the App Store, is increasingly pivotal. Apple can claim up to 30% of the revenue from in-app purchases and signups, making this a lucrative segment of their business. As Apple tells its investors, this growth in services is a cornerstone of their future financial strategy.
The tension between content creators and distribution platforms is nothing new, but there might be some light at the end of the tunnel for Disney. Regulatory scrutiny on Apple’s App Store policies is mounting globally, leading the tech giant to make grudging adjustments. These policy changes could include more favorable terms for companies like Disney, potentially reducing the financial burden currently borne by the entertainment behemoth.
Interestingly, the battle between tech companies isn’t confined to streaming services and app store fees. The parent company of Business Insider, Axel Springer, recently filed a significant lawsuit against Google, highlighting another facet of the tech world’s complex landscape. The lawsuit, supported by 31 other media organizations, seeks $2.3 billion in damages, alleging losses incurred due to Google’s advertising practices. This ongoing legal tussle underscores the multifaceted financial pressures and competitive dynamics at play.
As Disney navigates these choppy waters, the possibility of extracting better deals from tech giants remains a tantalizing prospect. Whether through regulatory changes or direct negotiations, Disney’s quest for a more favorable financial arrangement could set a precedent for other content creators and distributors. Bob Iger’s assertive stance may well be the first move in a broader realignment of how the digital distribution pie is sliced, ultimately impacting the entire streaming industry.
In this evolving digital age, the balance of power between content creators and distribution platforms continues to shift. As Disney pushes for a better deal, the outcome could reverberate across the industry, challenging the status quo and redefining the financial relationships that underpin the streaming economy.
