Published on December 7th, 2017 | by Brad Gibson0
What deal got us Amazon Prime on Apple TV? Let’s take score
Let’s not underestimate the importance of Wednesday’s delivery of the Amazon Prime Video app to Apple TV.
Granted, it’s not life-changing for human beings on this planet by any means, but in terms of the development of the streaming media industry and its impact on consumers like you, it shows cooperation between rival developers and content providers is essential for their long-term survival.
Consumers were the real winners in this ‘Battle of the Titans’, but just what did Amazon and Apple agree to and who came out ahead?
We may never know specifics, but there are a few interesting observations that can be made with all the evidence yet to be determined. Let’s keep score…
AMAZON – 3
Amazon’s real battle is not with Apple – at least not yet – but with rival Netflix. Amazon will now be able to say it’s in a more aggressive position with them to spread its content following its addition to Apple TV. Apple can do the same down the road as it starts to create a lot of its own content (and who’s to say part of the deal didn’t include a financial agreement on sharing certain Apple-produced content for Amazon down the road?) What’s the old ancient proverb? “The enemy of my enemy is my friend”? One point for Amazon.
Last June, Amazon CEO Jeff Bezos told attendees at the Code Conference that there had to be “acceptable business terms” with Apple to put a Prime Video app on Apple TV. Bezos framed the answer that it had to be in the best interest of customers. Bullshit. It’s all about what’s best for Amazon.
Case in point: The last thing Bezos wants in this deal was to pay Apple a percentage of non-Prime movies and TV show sales it would have sold through the AppStore. That’s why Prime users will be slightly inconvenienced by first having to buy content via their web browser before it appears through the Apple TV app for viewing. Industry experts believe Amazon paid something on this front, but nothing near what others have done. We might never know what or how much. Either way, Amazon scored enormously. In either case, another point to Amazon.
Although Apple TV is far from the most popular selling streaming device, it does hold a 15 percent market share versus Amazon’s 24 percent, according to market research firm Park Associates. That’s nothing to shake a stick at and Amazon benefits. Another point to Amazon.
APPLE – 3
With Apple now having 18 of the 19 most watched apps of its competing streaming box, Roku, the absence of the Prime Video app has long been one of Apple TV’s more glaring shortcomings. Its addition is a win-win for both companies, but Apple probably benefits more at this point as it needs quality apps to improve the Apple TV luster. One point for Apple.
While Apple might be losing some revenue from non-Prime movies and TV show sales, we’re sure they are making revenue off click-throughs in their TV app. Whether you know it or not, Apple’s TV app is a revenue generator. You click, they ring up the cash. Don’t be foolish thinking Apple’s doing it to make you happy. They love to hear ‘ching ching’ as you’re sitting on your butt. Another point to Apple.
Now with the release of the app, it remains to be seen if Apple’s fourth and fifth-generation Apple TV set-top boxes will now be sold on Amazon.com after a two-year-plus hiatus. Right now, neither 4th or 5th generations boxes are available through the online e-commerce service.
We can’t see how this wasn’t part of an agreement and the return of Apple TV boxes isn’t imminent. It might not be until after the holidays so Amazon can better guarantee a ‘Merry Christmas’ of strong Fire TV sales, but its return sure looks like a good bet for Apple. If it wasn’t part of the deal, you can safely say Tim Cook was an idiot. For now, we’ll give Apple one point.
So we’re tied at three.
We might never know all the specifics of the deal that got us to the Amazon Prime Video app, but there is one intangible that probably benefits Apple more than any other.
At a time when Apple is getting criticized left and right about its lack of emphasis in making Apple TV a real platform (and yes, some of that has come from this very journalist), adding Prime Video has increased its value on many fronts. It adds prestige that is tough to put a score to, especially when you keep in mind that Apple is all about high margins (ie, Apple TVs selling at $150) and low volume to premium customers – the exact opposite of Amazon’s sales strategy of high volumes sales and low-profit margins (ie, Fire TV at $40).
But this is probably the biggest benefit…It will help Apple to more easily sell Apple TV to more than 90 million U.S.-based Amazon Prime subscribers. According to research firm Consumer Intelligence Research Partners, 63 percent of Amazon’s customers are Prime members, and in the past 12 months, that total subscriber base has grown by 38 percent.
Yes, that adds even more value to one day getting Apple TV on the Amazon store for sale. But even if it doesn’t happen, 90 million potential buyers are nothing to ignore when many of those people will be premium customers willing to pay double or even triple the price for an Apple TV. That in itself is a big win for Apple. For that, we give them a big point.
So Apple edges out Amazon as the winner in getting Prime Video on Apple TV. As the streaming media market grows, it remains to be seen who benefits in the longterm from a deal many thought might never happen.