Apple misses out on massive streaming deal with Disney (Netflix get streaming movie rights)
http://variety.com/2016/digital/news/netflix-exclusive-disney-deal-us-fall-2016-1201781194/
This is a huge deal for Netflix and it's amazing Apple couldn't shovel enough money into trucks going to Disney in order to make it work.
Great for Netflix though...
This is a huge deal for Netflix and it's amazing Apple couldn't shovel enough money into trucks going to Disney in order to make it work.
Great for Netflix though...
Comments
The business deal would likely involve more than cash. Apple doesn't have a subscription video service and Netflix has over 81 million subscribers now. This is a Pay TV deal so even if Apple initially passed a lot of cash their way, Apple's TV audience is still lower than Netflix which has a knock-on effect for individual purchases for Disney.
Apple could send Disney $1b but if their TV audience is below 20m users vs 81m, Disney could miss out on 75% of the revenue per movie. To some extent it would correct itself as people would buy the Apple hardware but I don't think Disney would be as interested in targeting and promoting a single platform as Apple would.
It might have been worthwhile if Apple had bought Netflix years ago. It's a good brand and it would have fit well with the Apple TV box but it's valued too highly now for what it does and its success really depends it being multi-platform as well as having a strong network infrastructure.
Apple can make some improvements to how they deliver movies to make them more appealing to content providers. The UIs to movie stores are all a cluttered mess. Some of the categories they use to group movies are strange. It's hard to find something worth watching unless you know what you want already.
A single page would be more efficient instead of jumping in and out of categories to be able to find worthwhile movies quickly. Streaming services sometimes promote old movies if they are new to the service, which makes it hard to find good new movies. One possible layout would be to have rows of movies by year so 2016 top row then 2015 etc. and all movies from each year would be listed left to right (7x3 grid). These rows could then be ordered by popularity or chronological order. Then there would be a genre preference button somewhere and setting these options would narrow down the rows to just those settings. There wouldn't need to be a "classic" category that scatters olds movies randomly. You'd just scroll down the years to go to older movies. Clicking a row can expand the year. Clicking a TV show would expand to the show page with every episode. They can list movies not on the service and customers can request to be able to see it. If enough people do that, they can look at getting the content.
Having an upfront paywall on a movie store is a big disincentive to even use it. One option they can explore is just letting you start watching any movie and any TV show. This is like the IAP model with games. At a certain point in the movie, you'd be charged for watching it, either transparently or explicitly and they can charge by segment. Split the rental fee in 3 parts. You watch 25% of the movie free and you get charged $1.50 for each remaining quarter and you set a monthly cap on charges. The movie and TV studios can see if someone is a good customer and lower the rate if they watch movies and TV shows from the same provider. Game of Thrones might start out charging $3.50 per episode but then lower the rate if you've watched a few. Apple has a season pass option but that's per series whereas discounts can be done on a studio basis. On the front page of content they'd show the charge rate and you just hit play.
The pricing really needs to be sorted out on movies and TV. The following sums up why people use the streaming services:
http://venturebeat.com/2011/12/20/itunes-tv-show-season-pass-discount/
"While the new Season Pass option is nice, I’m not sure many people will really care. Both Hulu and Netflix streaming subscriptions are about $8 each per month. If you subscribe to both of them, it’s still cheaper than the majority of full seasons available on iTunes. Also, Hulu recently signed a deal to bring CW shows to the service, which means it has content from four of the five biggest TV networks. Since Hulu Plus subscribers have access to all the episodes in the current season, paying the $8 per month seems like a better option.
Apple could do with having the equivalent of Beats in movie form and offering people good value content. You can pay for 120 songs at $0.99 each or pay $10/month and listen to anything on Beats all year. Once you go past a certain amount of hours of listening in a year, Beats becomes the better value option.
Once people can discover good content at a good price, the audience will get on board and then the content providers will want to target them. I'm not sure Apple even needs an ownership option any more. The movies are all DRM anyway. With the discount option, Apple can just keep lowering the rental fee for further watches of a movie or TV show. For offline watching, they can just have a caching method and reauthorize the cache if it expires.
The same problem arises with Beats/Spotify/Pandora/Tidal etc though, which is that people are being pushed into subscribing to multiple services to get the content they want. This is very quick to create a monopoly service because you don't want to be paying twice for mostly the same content so you go with the most popular service, which then keeps attracting the big content providers. If content providers were forced to support every platform, that could be done in the interests of promoting fair competition but part of what makes services competitive is having exclusive content, which they achieve by lowering prices and offering a better service.
Maybe the way to do it is to have a multi-platform subscription (which can cost more). So the streaming providers would agree to authorize a single login like how Facebook logins work on different services. The subscription fee that people pay would be distributed based on the service customers used. So if someone subscribed to Netflix and they logged into a Hulu or iTunes service, a portion of the fee would go to the service based on usage. There would be no sharing of the fee for pay-to-watch content as that gets charged on top but it could still be a single billing/login option. Ideally it would be a token system rather than a typed login for security and convenience. Tokens (encryption keys/hashes/certificates) would be synced to the devices. This can work with Youtube premium content too. The delivery platform wouldn't really matter. This can be done for music services. There's still a benefit to exclusive content as they get a portion of the subscription based on usage but it removes the lock-in headache for customers.