Amazon is much more than an e-commerce behemoth. The Seattle-based company is a major distributor of third-party streaming video services and proprietary content — the former through Amazon Channels.
So when Disney partnered with Amazon to distribute its media apps via the latter’s Fire TV streaming media device, it wasn’t about to relinquish ad revenue from the apps — even if Amazon is reportedly the second-largest distributor of streaming TV apps.
Fire TV, which trails only Roku in Q2 2019 streaming media device shipments, according to Strategy Analytics, enables consumers to stream Prime Video, Netflix, Sling TV and Hulu, among others, to the television.
Amazon wants a piece of Disney’s ad revenue from its branded apps — including ABC, ESPN and Disney Channel — according to The Wall Street Journal, which cited resources familiar to the situation.
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Disney is resisting the request, a move that could see its apps disappear from Fire TV. Indeed, the platform is not slated to carry Disney’s pending subscription streaming service, Disney+.
In the burgeoning over-the-top video ecosystem, media companies and tech companies are grappling with distribution issues — notably carriage revenue agreements — typically reserved for the pay-TV landscape.
Indeed, with Google and Amazon competing for the identical third-party ad revenue, neither offer its proprietary (YouTube, Prime Video) video platform on the other’s platform.
“The traditional negotiations between cable operators and media companies are the most vicious negotiations that I’ve ever been exposed to. And now you see that world colliding with these tech behemoths,” said Steve Shannon, chief executive of Tetra TV, which operates a marketplace for ads on streaming video, told The Journal.
When Amazon launched Fire TV in 2014, it didn’t seek a cut of third-party ad revenue. But five years later, Amazon takes significant revenue cuts from third-party streaming services offered on its Channels platform for Prime members.
The strategy is now being emulated on Fire TV, with the platform reportedly seeking upwards of 40% of third-party app ad-revenue. Disney apparently is willing to offer 10%, according to WSJ.
Meanwhile, Roku reportedly demands as much as 30% of revenue from third-parties operating on its platform. Disney-owned Hulu pays Roku about 15%.
Until the dispute is resolved, Disney+ will be available via Apple TV, iPad, iPhone, Android devices, Chromecast, Sony PS4, Xbox One and Roku.