Phil Schiller, Apple’s senior vice president of worldwide marketing, has revealed changes coming to the Apple App Store that directly impact the likely reasons why Amazon Video is not available on the Apple TV. The specific change is a reduction in Apple’s cut of an app’s subscription revenue from 30% to 15%, after a customer has been subscribed to a service for over one year. Amazon hasn’t specifically said that the current 30% “Apple Tax” is the reason they haven’t released an Amazon Video app on the Apple TV, but it is widely speculated to be their main concern with the platform. Jeff Bezos, CEO of Amazon, did say last week that “we want it to be on the device with acceptable business terms,” when asked about Amazon Video on the Apple TV.
Under the new Apple App Store policy, Amazon would now keep 85% of most Prime membership fees from customers who signed up through an Amazon Video app on Apple devices. While Apple would still pocket 30% the first year and 15% each subsequent years, the new terms are a step in the right direction for Amazon, which might make them reconsider releasing an Amazon Video app for the Apple TV.
Some popular services already pay less than 30% of their in-app purchases to Apple. Netflix, for example, already pays only 15% of the subscription fee to Apple for customers who sign up through the Apple TV. Now that 15% is the new standard cut for all apps, once a customer has subscribed for over a year, it may mean that large services like Netflix and Amazon will be able to negotiate a revenue-share rate that’s even less than 15%.
Even if Amazon were able to negotiate an acceptable revenue-share percentage with Apple for Prime subscriptions through Apple devices, there’s still the question of individual video rentals and purchases. Since the new Apple App Store policy changes only effect subscriptions, all other in-app purchases through a theoretical full fledged Amazon Video app would still be subject to a 30% cut from Apple.
Amazon spent $1.3 billion in 2014 and $3 billion in 2015 acquiring content for Amazon Video. With all the movies Amazon has been acquiring this year, that figure is bound to increase once again by the time 2016 is over. Jeff Bezos said he can see Amazon Studios becoming the fourth pillar in Amazon’s business, joining retail, AWS, and Prime. With more and more of Amazon’s resources being put into Prime Video, it’s becoming a dominant force in streaming media, that is, if it isn’t one already.
There’s no way to know what “acceptable business terms” are necessary for Amazon to release a video app on the Apple TV, but it’s clear they hold Prime Video in high regard. Apple has changed their in-app purchase policy to be more favorable to subscription services., but only time will tell if it’s enough to entice Amazon Video onto the Apple TV.