Disney Gives Netflix Exclusive Subscription, Whither Apple?

| Analysis

The Walt Disney Company gave streaming video service Netflix exclusive subscription rights for first-run movies. The two companies announced the multi-year deal on Tuesday, a deal that strongly suggests Apple isn't launching its own subscription service any time soon.

Apple and Disney have been close partners in the digital movie, TV, and music markets since Bob Iger took over from Michael Eisner in 2005. Steve Jobs publicly sung Mr. Iger's praises, and eventually sold him Pixar in a deal that made Mr. Jobs immensely wealthy and one of Disney's largest shareholders.

Bob Iger & Steve Jobs After Apple's

Bob Iger and Steve Jobs after Apple’s “Showtime” Media Event in 2006
Photo credit: Bryan Chaffin
(Click the image for a larger version)

Since then, Disney has always been the first company to work with Apple when it launched new iTunes services, and it was one of the first music companies to agree to sell music on iTunes without DRM restrictions. As one of its largest shareholders, Mr. Jobs sat on Disney's board, but his passing in 2011 cleared the way for Mr. Iger to join Apple's board, a position he maintains today.

The two companies have worked so closely together on matters pertaining to the distribution of digital content, an exclusive subscription deal with Netflix strongly suggests that Apple isn't close to announcing its own subscription service, though the company has long been rumored to working on such a service.

CBS CEO Less Moonves

Judging on that close cooperation under Mr. Iger's rule, it's no great stretch that Disney would be Apple's go-to content company for launching such a service. The exclusive nature of the Netflix deal precludes that from happening, and from our vantage point that means Apple has abandoned its unannounced plans for a subscription service.

Apple has reportedly approached many movie studios and networks about a subscription service, and making some kind of Internet-connected TV was high on Steve Jobs's priority list, according to Walter Isaacson's biography, Steve Jobs.

Those studios and networks have been leery of inking a deal with Apple, in part because they don't want to upset the apple cart of existing advertising-based paradigms and partly because they fear that Apple will do it right yet again, and thus have even more power.

While some, including Piper-Jaffray analyst Gene Munster, still expect Apple to release some kind of updated TV offering at some point, the chances that it will include a subscription service seem greatly and distinctly less likely now.

The Disney-Netflix deal includes Disney, Walt Disney Animation Studios, Pixar Animation Studios, Marvel Studios and Disneynature titles, and Disney and Netflix announced a separate deal for some of Disney's vast archives, including Dumbo, Pocahontas, and Alice in Wonderland.

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2 Comments

Terrin

Not sure why it prevents Apple from offering a TV service. The way I thought Apple would do it is offer channels as Apps. Netflix is already an App on Apple TV. I doubt Apple had any plans of getting rid of Netflix. Apple could still offer the Disney Channel.

The rumors I have heard had little to do with Apple streaming movie content. Instead they were about Apple competing with Pandora, and bringing a TV to market.

jbruni

Recently received Dark Knight Rises Bluray with Ultraviolet. Apparently, the only way to watch this is using the Flixster app and they refuse to convert it to an iTunes unlock code. I don’t trust them based on their past practices.

I’m sure this and the Disney snub are all an attempt to keep Apple at bay.

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