Disney Takes on Big Tech: A Battle for Better App Store Deals

In a world where streaming services are rapidly becoming the new norm, Disney CEO Bob Iger has a bone to pick with the tech giants that distribute his company’s beloved content. Speaking at an investor conference, Iger laid out his frustrations with the current distribution deals that Disney has with platforms like Apple and Roku. Unlike Netflix, which largely goes it alone, Disney’s streaming services like Hulu and Disney+ are heavily reliant on third-party app stores. While this approach offers benefits, it also comes with some hefty costs that Iger is no longer willing to ignore.

Let’s dive into the specifics. For starters, Apple has a deal in place for video companies that charges a 15% fee on revenue generated from signups made within the Apple-distributed apps. Roku, on the other hand, not only charges video companies for signing up customers on its devices but also demands a slice of the ad inventory from these services. It’s a symbiotic relationship, but one that seems to be tipping the scales more in favor of the tech companies than the content creators.

Netflix, for example, has managed to avoid such pitfalls by distributing its service primarily through its own platform. This strategy has not only safeguarded its growth but also enhanced its profit margins. Disney, on the other hand, has not been so fortunate. The company finds itself shelling out significant sums to these third-party distributors, which, according to Iger, is cutting into their revenue more than he’d like.

The crux of the matter is that app stores and app distribution are integral to many tech companies’ business models. Apple, which can take up to 30% of revenue from in-app purchases and signups, has repeatedly emphasized to its investors the critical role its “Services” businesses, like the App Store, play in its future growth. The stakes are high for both sides, and neither seems willing to back down easily.

Interestingly, Disney might not even need to leave these third-party platforms to find a more favorable arrangement. Regulatory pressures from around the globe are forcing Apple to reconsider some of its App Store policies. These pressures might just lead to a more lenient deal for Disney, potentially reducing the financial burden on one of the world’s largest video companies. Given the ever-evolving landscape of digital regulation, it’s plausible that Disney could negotiate better terms without having to make any drastic moves.

In a related note, it’s worth mentioning that the CEO of Business Insider’s parent company, Axel Springer, Mathias Döpfner, is also a member of Netflix’s board. Additionally, Axel Springer has joined a coalition of 31 media groups in filing a $2.3 billion lawsuit against Google in Dutch court, accusing the tech giant of unfair advertising practices. This lawsuit underscores the broader tension between content creators and tech platforms, a dynamic that is likely to shape the future of digital media distribution.

Ultimately, Bob Iger’s call for a better deal is more than just a plea for fairness; it’s a strategic move aimed at ensuring Disney’s long-term profitability in an increasingly competitive market. Whether through regulatory changes or strategic negotiations, it’s clear that Disney is poised to reconfigure its relationships with these tech behemoths. And if history is any indicator, it’s a safe bet that Iger will navigate these waters with the same acumen that has made Disney a global entertainment juggernaut.