Apple Is Giving Up Its 30% Cut to Encourage ‘Premium’ Streaming Providers to Embrace Apple TV

Amazon Prime Video Finally Makes Its Debut on Apple TV
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For years, Apple has insisted that all purchases of digital items and content within iPhone, iPad, and Mac apps must be made through its own in-app purchase program — and subject to its 30% cut — with no exceptions. It was a policy that’s rather infamously left apps like Amazon’s Kindle hampered by forcing users to skip out to a web browser in order to buy e-books and then return to the app in order to actually read them.

The same has been true with video apps, whether offering content for subscription or purchase — if you wanted to put a “Buy” button in your app, you had to pay Apple a 30% cut of each and every purchase made by your customers. If developers didn’t want to share their revenue with Apple, their customers were stuck visiting a web page, without even being allowed to put links in the app to point their customers to their product pages.

It’s hard to argue that this policy has been consumer unfriendly, yet Apple — a company that’s usually so focused on providing the best user experience possible — has been intransigent in its stance, presumably feeling that it’s up to individuals developers to pony up if they wanted to take care of their customers. It also borders on being anticompetitive, as rivals like Spotify have claimed, since of course Apple doesn’t have to deal with this in its own apps (although to be fair, it’s unclear how the company accounts for revenue internally — it could very well be paying itself a 30% cut between divisions, but either way it all contributes to Apple’s bottom line).

However, it has recently came to light that Apple may actually be making one pretty big exception in order to encourage services to play nicely with the Apple ecosystem.

Amazon Prime Video

Yesterday, The Verge reported that Amazon’s Prime Video iOS and tvOS apps suddenly began letting customers make in-app purchases right in the app. This was a pretty big deal and an entirely unprecedented move from the company that was forced to take the “Buy” buttons out of its Kindle apps several years ago.

While it wasn’t clear at first whether Amazon had just decided to suck it up and pay Apple its 30% fealty, especially since the prices hadn’t been raised to account for the extra expense, Apple later confirmed that it entered Amazon Prime Video into a special program for “premium” video providers that’s actually been around for several years; it just so happens that Amazon is the first big-name provider to take advantage of it.

According to a statement by an Apple spokesperson, this already established program would seem to be designed to encourage video providers to get on board with Apple’s technology. Apple’s not simply letting providers keep that 30% cut in their pockets for nothing — it expects something in return.

Apple has an established program for premium subscription video entertainment providers to offer a variety of customer benefits — including integration with the Apple TV app, AirPlay 2 support, tvOS apps, universal search, Siri support and, where applicable, single or zero sign-on.

Apple statement

Specifically, it expects that these premium video providers integrate their services with the Apple TV set-top box. This means not only offering their own native tvOS apps, but tying into everything else that’s part of the Apple TV experience: AirPlay 2 support, universal search, Siri support, single sign-on, and of course integration with the Apple TV app. On this last one, it’s not clear if Apple simply means search integration from the TV app or an actual tie-in to Apple TV Channels, although we suspect it’s merely the former right now.

Purchases and Rentals Only

To be clear, the new policy only applies to one-time purchases (and rentals) of individual times like movies and TV shows and not actual subscriptions to things like Amazon Prime. In the case of purchases, these are processed through Amazon rather than Apple’s in-app purchase system, so they’ll be charged to whatever payment method the user has on file with Amazon and show up in your Amazon purchase history. So basically, for most people it’s just like making a purchase from Amazon’s web site, except that you no longer need to leave the app.

What’s interesting, however, is that it does look like it will fall back to using Apple in-app purchases if the user doesn’t have a card on file with Amazon, so this is still definitely more than just an in-app link to the normal web site, and according to app developer Guilherme Rambo, there’s a special “entitlement” that’s been hiding with iOS and tvOS for a while now. It’s unclear if Apple still gets its 30% cut for those payments that end up going through through its own system.

Amazon Prime actually isn’t the first premium video provider to join this exclusive Apple club, but it’s probably the first one you’ve actually heard of. Bloomberg’s Mark Gurman notes that Canal+ has been participating since 2018, and another service, Altice One signed up in February.

On qualifying premium video entertainment apps such as Prime Video, Atlice One and Canal+, customers have the option to buy or rent movies and TV shows using the payment method tied to their existing video subscription.

Apple statement

There won’t be a lot of services that will be able to take advantage of this new policy, to be fair, since many streaming services like Netflix and Spotify — who have long railed against Apple’s 30% take — don’t actually offer purchases or rentals, but it may be the first step in Apple loosening the reins a bit.

Back in 2016, Apple reduced its cut to 15% for each subscription that continued beyond the first year, partly as a concession to developers but also as a way of encouraging them to offer quality subscriptions that keep customers paying, so it’s not hard to see how this might be another step in that direction, especially since it’s clear that Apple has been trying to turn its Apple TV ecosystem into an entertainment hub for a while. It’s had limited success in wooing other content providers to come on board with features like Apple TV Channels, so perhaps by sweetening the pot it hopes its partners can help to create a more unified Apple TV experience.

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