Apple ((AAPL – Free Report) recently expanded an established program for premium subscription video entertainment providers and eligible applications such as Amazon (AMZN – Free Report), the first video streaming service, which can now offer customers the ability to buy or rent movies and TV shows using the payment method linked to their existing video subscription, according to a Bloomberg report.
In addition, the program also covers features such as integration with the Apple TV app, AirPlay 2, universal search and integration of single sign-on, among others. Canal +, owned by Vivendi SA, and Altice One of Altice USA Inc. have joined the Apple program in recent years.
For most apps, Apple’s App Store policy requires that digital content be purchased and paid for through Apple’s payment system, which represents a 30% reduction in the purchase price.
For years, Amazon has prevented users from buying movies and TV shows directly from the main video app on Apple devices.
Apple Inc. Awards and Consensus
Apple strengthens third party relationships with Amazon
Apple and Amazon have deepened their relationships in recent years. Last year, Amazon agreed to remove all third-party resellers on its buying platform while Apple launched an official reseller section for its products on Amazon.
In addition, in December 2019, Apple Music, Apple TV + and Apple Podcasts were deployed to Amazon’s fleet of smart devices. This partnership has made Amazon Echo the first third-party client for the Apple Podcasts service.
Many apps, including Netflix (NFLX – Free Report), Tinder, Spotify (SQUARE – Free Report) and Amazon others have sometimes bypassed fees from the Apple App Store by redirecting users to a website.
With the current program, the Amazon Prime video app for iPhone, iPad, and Apple TV now allows customers in the United States, the United Kingdom, and Germany to purchase and rent movies and TV shows across the country. ‘application. Apple appears to be allowing Amazon to use its own payment system, bypassing traditional in-app purchases.
Amazon recently added a new video cinema hub to its app, highlighting movies released in cinemas that can be purchased. Adding in-app purchase options to Apple TV, iPhone and iPad for primary service subscribers is likely to boost Amazon revenue without paying a cut.
Users can enjoy premium Amazon video content directly on native iPhone, iPad and Apple TV apps. Previously, users were forced to purchase the TV show or movie through Safari or an app on another platform.
Impact on Apple’s Top Line
In 2016, Apple began allowing subscription services to keep 15% more revenue if a customer purchased and maintained a subscription through iOS for more than a year. This new program is an extension of this approach, exempting some partners from its 30% reduction as long as they work closely to promote the Apple ecosystem.
We believe the revenue generated by premium subscription video entertainment providers on the App Store outweighs the money spent by Apple to maintain the App Store and the costs of enforcing its strict content and privacy guidelines. and security.
In addition, it ensures that the App Store remains a leading contributor to growth for Apple at a time when services are becoming a vital part of its business.
In the first quarter of fiscal 2020, this Tier 3 Zacks (Hold) company experienced double-digit service growth in all geographic segments. The robust performance of cloud services, music, payment services, and search advertising from the App Store generated service revenue. You can see the full list of Zacks # 1 Rank (Strong Buy) stocks today here.
The App Store announced record performance in the first quarter. Third party subscription revenues increased 40% year over year.
However, the current limit on premium subscription video services should encourage game developers and other content developers to push for the same benefits. In addition, the program is expected to have a negative short-term impact on the company’s revenue.
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