Apple is in the final stages of preparing its new streaming video service, which will feature free original content for device owners and a subscription platform for existing digital services. But don't expect Netflix to be a part of it, and HBO's participation is also in doubt, according to people familiar with the matter.
Apple is aiming to launch service in April or early May. It will allow customers to sign up for existing digital streaming products and watch them in the iOS TV application, similar to Amazon's Prime Video Channels. Apple wants to simplify mobile video viewing by housing content in one app instead of forcing users to launch separate apps for each service.
Lions Gate's Starz; CBS, which owns Showtime; and Viacom are expected to offer subscription streaming services on the Apple platform, according to people familiar with the matter, who asked not to be named because the discussions are private.
HBO may join its premium network brethren but isn't as far along in discussions with Apple, one of the people said. Apple hasn't offered HBO the same terms that Amazon offered, said the person.
While the exact disagreement between Apple and HBO isn't known, media companies have been concerned about data sharing and revenue splits as Apple tries to aggregate existing services in new ways. For instance, The Wall Street Journal reported Tuesday that Apple is pushing to take nearly 50 percent of revenue derived from a new subscription news service it's planning to launch later this year.
Apple is pushing for a 30 percent cut on every customer that subscribes to an over-the-top video service through its streaming service, three of the people said. Currently, Apple takes a 15 percent cut on revenue from customers that sign up to HBO Now, Netflix, and other streaming apps through the App Store, two people said.
Netflix and Hulu aren't part of Amazon Prime Video Channels and aren't expected to be a part of Apple's product either, according to people familiar with the matter.
Spokespeople at Apple, CBS, HBO, Hulu, Netflix, Starz and Viacom declined to comment.
Apple has jostled with traditional media companies for years over getting access to their content. CEO Tim Cook previewed Apple's new offering on the company's earnings conference call last month.
"We see huge changes in customer behavior taking place now and we think that it will accelerate as the year goes by with the breakdown of the cable bundle. I think that it'll likely take place at a much faster pace this year," Cook said. "We will participate in the original content world. We have signed a multi-year partnership with Oprah, but today I'm not really ready to extend that conversation beyond that point. We've hired some great people that we have a super amount of confidence in, and we'll have something to say more on that later."
Apple's deal with Oprah Winfrey and other big entertainment names like Reese Witherspoon and Steven Spielberg will give Apple device owners access to both film and TV content for no additional charge. Apple is planning to offer its original content free to device users, CNBC first reported in October. Apple planned to spend about $1 billion on originals last year, the Wall Street Journal reported. Apple has agreed to a number of movies and series already, including animated features, comedies, reality shows and dramas, most of which were compiled by Macworld here.