Disney+ and Hulu Avoid Apple’s 30% Fee: Implications for Streaming Services

Walt Disney Co. has made a strategic decision to discontinue allowing new subscribers to sign up for Hulu and Disney+ through Apple Inc.’s App Store. This move is aimed at circumventing the in-app purchase fees imposed by Apple, which typically range from 15% to 30% per transaction. While existing subscribers who are currently billed through Apple will not be affected by this change, new customers are now directed to Disney’s websites to explore subscription options directly.

The decision to halt in-app sign-ups aligns with Disney’s recent price adjustments that took effect on October 17. Disney+ subscription plans saw a $2 increase, while Hulu subscriptions with and without ads experienced respective $2 and $1 price hikes. These changes, coupled with the elimination of in-app purchase fees, are part of Disney’s broader strategy to enhance streaming revenue, alongside recent efforts to crack down on password sharing.

In August, Disney reported its financial results for the third quarter of fiscal 2024, marking a significant milestone for its streaming segment. The streaming division, encompassing Disney+, Hulu, and ESPN+, achieved profitability for the first time, surpassing earlier projections. Notably, the segment reported an operating profit of $47 million, a substantial turnaround from a $512 million loss in the same period the previous year. However, excluding ESPN+, the direct-to-consumer streaming unit still recorded a $19 million loss, while revenue from Disney’s traditional TV networks experienced a 7% decline.

Disney’s decision to cease subscription sign-ups via Apple’s App Store reflects a growing trend among tech companies challenging Apple’s in-app purchase policies. This trend gained momentum earlier this year when the Supreme Court rejected Apple’s appeal in an antitrust lawsuit involving Epic Games, potentially impacting Apple’s revenue. Meta Platforms, Microsoft Corporation, and Match Group have also voiced concerns over Apple’s payment policies, signaling a broader industry shift.

The Apple App Store generated $24.6 billion in revenue from users worldwide in the second quarter of 2024, more than double the revenue generated by Android users through the Google Play Store. Projections suggest that by 2027, the Apple App Store could generate around $125 billion in global revenue, while the Google Play Store is expected to reach $60 billion in revenue from subscriptions and in-app purchases, according to Statista.

In conclusion, Disney’s decision to bypass Apple’s in-app purchase fees for Hulu and Disney+ subscriptions reflects a strategic move to optimize revenue streams and adapt to evolving industry dynamics. This shift underscores broader industry trends of tech companies reevaluating their relationships with app store platforms and advocating for fairer payment policies.