The Apple TV, Apple’s 50% fee cut, and the walled garden

Yesterday, Bloomberg reported that Apple cut video subscription fees to all partners from 30% to 15%:

Apple’s hefty cut of sales made via its App Store has long angered partners, some of whom have accused the technology giant of anti-competitive behavior. The concessions speak to the growing importance of video to Apple, which next month will introduce a new app devoted to TV shows and movies.


Some video partners have already been paying 15 percent of monthly subscription fees to Apple. The company is now extending the rate to all subscription video services as long as they are integrated with Apple’s new TV app, said the people who asked not to be identified because the changes aren’t public. To compensate for the fee, some providers increased the price of their services sold through the App Store to equal the revenue generated on other distribution channels.

The Apple TV is not the walled garden of iOS. While iOS uses services like Apple Music and blue Message bubbles to keep you inside, you can easily switch inputs on your TV to accommodate game consoles and other inputs, including devices from Google and Amazon that feed non-Apple content into the mix. If a video service is more expensive through Apple TV, it’s easy enough to switch inputs to another device if it means saving money each month.

Switching TV inputs is already an ingrained habit for folks who own both an Apple TV and subscribe to some form of cable service.

If the price is the same, and if Apple offers a truly universal search mechanism, the walled garden starts to feel more compelling. Why switch inputs when everything you want is on the already connected device?

The disruption of cable and subscription TV is still in its early stages. The rules are still being set, alliances still being formed. Apple has a huge opportunity here. Dropping the fee seems a smart move that will help cement the right partnerships, bring more players into the fold.