Amazon is making a significant move to position its Prime Video as the ultimate streaming hub by adding Apple TV+ to its lineup of channel subscriptions. This partnership allows Prime Video users to subscribe to and watch Apple TV+ content all within a single app, simplifying the viewing experience.
So, why is this happening now? For Amazon, the timing is critical. The company recently increased the price for its ad-free viewing tier, now called 'Prime Video Ultra.' To justify this price hike and prevent customers from leaving—a phenomenon known as churn—Amazon needs to offer more value. By becoming a 'super-aggregator' that bundles services like Apple TV+, Peacock, and Max, Amazon makes its platform stickier and more indispensable to users.
From Apple's perspective, this deal is a strategic win. The company's Services division is a major growth engine, consistently setting new revenue records. Partnering with Amazon provides a massive new distribution channel to attract subscribers without devaluing the brand by cutting prices. It's a low-friction way to grow. Furthermore, as Apple faces antitrust lawsuits from regulators like the U.S. Department of Justice, which accuse it of creating a 'walled garden,' this collaboration with a major competitor demonstrates a willingness to be more open.
The financial arrangement is mutually beneficial. When a user subscribes to Apple TV+ through Prime Video for $9.99 per month, Amazon takes a commission, or a 'take-rate,' which typically ranges from 15% to 50% in the industry. For a major partner like Apple, this might be around 30-45%. This means for every million subscribers, both companies could generate tens of millions in annual revenue, creating a new, shared income stream. It’s a classic case of rivals finding common ground where their business interests align perfectly.
- Churn: The rate at which customers cancel a subscription or stop using a service over a given period.
- Super-aggregator: A platform that gathers numerous services from different providers into a single, convenient interface for the user.
- Take-rate: The fee or percentage a marketplace platform (like Amazon) charges on a transaction made by a third-party seller (like Apple).