In a surprise move, Apple and Amazon have struck a deal to bring Apple TV+ to Prime Video Channels as an add-on subscription. At first glance, this partnership is solid for both companies, offering scale and expanded access. But if we look deeper, it’s hard not to view this as a white flag from Apple—a concession that they missed a much bigger opportunity in the streaming landscape. The company had all the right pieces in place but made several critical missteps in its TV strategy, forcing it to play a supporting role rather than becoming the dominant force it could have been.
Apple Could Have Been “The OS”—and “The Aggregator”
The Apple TV app has one of the best user interfaces in the connected TV space, yet Apple never fully capitalized on its potential to become the default TV operating system (OS) in homes across the globe. They were poised to be the ultimate aggregator of content with their TV app, offering a seamless experience for users to navigate between services. Instead of leveraging this potential Trojan horse, Apple focused on prestige, which led to missed opportunities.
Apple’s refusal to release cheaper connected TV (CTV) devices to maintain its luxury image ultimately limited its TVOS market share. Had they embraced more accessible hardware and prioritized wide adoption over exclusivity, they could have dominated the living room the way they do with smartphones and tablets.
When Apple launched Apple TV+ in 2019, the focus shifted away from the TV app’s aggregation potential. I remember being asked by CNBC about Apple TV+ and saying, “Everyone’s talking about Apple TV+, but nobody’s talking about the Apple TV app.” I believed then—and still do—that the app, not the streaming service, was Apple’s real weapon. However, Apple chose a different path, prioritizing its content creation strategy, which has yet to yield the market share or buzz it hoped for.
Apple’s TV Strategy Fumbles
Instead of focusing on building its TVOS dominance, Apple went hard on content production with Apple TV+, investing heavily in original series and movies. While some of their shows, like Ted Lasso and The Morning Show, have gained traction, Apple TV+ remains a smaller player in a market dominated by Netflix, Amazon, and Disney.
Apple’s parallel attempts to break into cinema haven’t fared any better. The company initially planned to spend $1 billion annually on films for theatrical release, aiming for box office success and awards buzz. However, Apple is reportedly pulling back on its theatrical ambitions after several underwhelming performances from films like Argylle and Napoleon. Bloomberg recently reported that Apple is rethinking its film strategy, cutting back on its theatrical releases and lowering budgets for upcoming projects. Major releases like Wolfs, set for a wide theatrical debut, are now heading straight to streaming.
Enter Amazon: A Strategic “White Flag”
This new deal with Amazon to bring Apple TV+ into the Prime Video Channels ecosystem is undoubtedly a win in terms of scale—Amazon has hundreds of millions of users, and the reach it offers is undeniable. But there’s an underlying message: Apple is conceding that it cannot be a leader in the streaming wars. Instead of building out its ecosystem and using the Apple TV app as the central hub for content, Apple is now becoming just another “channel” within Amazon’s aggregator model.
Prime Video chief Mike Hopkins touted Amazon’s ability to attract partners thanks to its scale and ease of access. He compared Prime Video to a “broadcast network on steroids,” offering users a one-stop-shop for all their streaming needs. This partnership makes sense for Apple in the short term, but it feels like a long-term loss. Apple could have built something similar, but now they’re just another option in someone else’s ecosystem.
The Amazon Warning: What the Industry Can Learn
This deal should also warn the rest of the industry about the power Amazon holds in the streaming world. In 2018, I warned media companies about the risks of relying too heavily on Amazon Channels for distribution, drawing a parallel to the downfall of Toys “R” Us. Some companies I worked with then attributed as much as 70% of their streaming business to Amazon. That level of dependency is dangerous because it gives Amazon control over pricing, customer data, and the user experience.
Toys “R” Us made a similar mistake by outsourcing its e-commerce business to Amazon in the early 2000s. By the time Toys “R” Us tried to pivot, the damage was done. Media companies should be cautious not to fall into the same trap, especially as Amazon grows its dominance in the TV space. When consumers can access your content through platforms like Amazon, they’re less likely to use your direct-to-consumer apps. The result is a loss of direct customer relationships, reduced margins, and limited access to valuable data.
Revenue Split: Not a Typical Amazon Channels Deal
The specifics of the Apple-Amazon deal haven’t been disclosed, but it’s unlikely that Apple agreed to the standard Amazon Channels revenue split. Traditionally, Amazon takes a 30% cut from streaming partners, though they’ve been known to try to negotiate 50/50 deals for some content providers. However, Apple’s clout and Amazon’s recognition that this partnership is mutually beneficial likely means Apple isn’t paying anywhere near 30%. Probably not even close.
This deal is far from typical. Both companies are not only device makers (Apple TV and Fire TV) but also content owners (Apple TV+ and Prime Video). Moreover, they compete to dominate the CTV device and operating system markets. This is likely more of a quid pro quo arrangement—Apple gets Amazon’s scale while Amazon further solidifies its position as the go-to aggregator in streaming.
The Take
This deal makes sense for Apple. They gain access to Amazon’s massive user base, which can help grow subscriptions for Apple TV+. But we can’t help but reflect on what could have been. Apple could have dominated the TV OS market. It could have leveraged its Apple TV app to become the ultimate streaming aggregator. Instead, Apple is now a channel within Amazon’s broader streaming ecosystem—a smaller player catering to a much larger and more powerful Goliath.
What Steve Jobs had envisioned when he “cracked” TV was so much more. Apple had the chance to significantly impact the streaming space with the TV App, but it’s hard not to wonder if they’ve let that opportunity slip away.
