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

Walt Disney Co. has made a strategic decision to stop allowing customers to subscribe to Hulu and Disney+ through Apple Inc.’s App Store. This move is aimed at avoiding the in-app purchase fees charged by Apple. New and returning subscribers are no longer able to sign up and pay for these services via the App Store, but existing subscribers who are currently billed through Apple will not be affected by this change.

Instead, Disney is directing customers to its websites to explore subscription plans and sign up directly. This approach allows Disney to circumvent the 15% to 30% fee that Apple typically imposes on each transaction made through in-app purchases. This decision aligns with Disney’s recent price adjustments that went into effect on October 17. The cost of Disney+ plans increased by $2, while Hulu’s plans with and without ads saw a $2 and $1 rise, respectively.

Disney’s move to eliminate in-app purchase fees is part of its broader strategy to enhance streaming revenue, alongside recent price hikes and efforts to crack down on password sharing. In August, Disney reported its financial results for the third quarter of fiscal 2024. Notably, Disney’s streaming segment, comprising Disney+, Hulu, and ESPN+, achieved profitability for the first time, surpassing earlier projections.

The streaming division generated an operating profit of $47 million, marking a significant improvement 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 dropped by 7%.

Disney’s decision to halt subscription sign-ups for Hulu and Disney+ through Apple’s App Store reflects a broader trend of tech companies challenging Apple’s in-app purchase policies. Earlier this year, the Supreme Court’s ruling, which involved Epic Games and Apple, could potentially impact Apple’s revenue as it rejected Apple’s appeal in an antitrust lawsuit related to its App Store.

Other tech companies like Meta Platforms, Microsoft Corporation, and Match Group have also expressed concerns over Apple’s payment policies. In the second quarter of 2024, the Apple App Store reportedly generated $24.6 billion in revenue globally, surpassing the revenue earned by Android users through the Google Play Store. Projections suggest that by 2027, the Apple App Store could generate around $125 billion in revenue worldwide, while the Google Play Store is expected to reach $60 billion in revenue from subscriptions and in-app purchases.