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Why Might Apple Have Reduced Apple TV Subscription Fees?

Key Mobile Industry Updates from Fitbit, Apple, Google, and More

(Continued from Prior Part)

Apple may have reduced the fees for subscriptions through Apple TV

In the previous part of this series, we discussed how Apple (AAPL) will start reducing its App Store fees for subscriptions. However, it seems Apple has already reduced the fees that it charges media companies for the content streamed through Apple TV devices.

According to a report from Recode, Apple may have reduced the fees that it charges video streaming companies such as Netflix (NFLX) and Hulu Plus to 15% for every subscriber that signs up through Apple TV. The report also mentions that Apple has kept the fees to 30% for subscriptions signed through the iPhone or iPad.

Apple will benefit when it will eventually launches its subscription TV service

This shows that Apple wants to encourage media companies to urge their users to use Apple TV to stream video. The sole purpose of Apple TV is to provide quality streaming content to consumers, unlike the iPhone or iPad.

Connected TV devices such as Apple TV, Roku, and Microsoft’s (MSFT) Xbox have become some of the most popular devices to stream video. According to the Adobe Digital Index (ADBE) “Q1 2015 Digital Video Report,” the share of connected TV devices used for TV Everywhere has increased from 6% in 1Q14 to 24% in 1Q15. That’s an increase of four times in the last year, as you can see the graph above.

By providing users quality content, Apple will benefit when it will eventually launches its own subscription service. In our Market Realist article Apple’s Subscription TV Service: No Launch Next Week, we saw that Apple is planning to offer programming on its own devices from about 25 TV networks. The networks include Walt Disney’s (DIS) ABC, CBS (CBS), and Twenty-First Century Fox (FOXA).

To get diversified exposure to Apple, you can invest in the PowerShares QQQ Trust, Series 1 ETF (QQQ). QQQ invests ~14% of its holdings in Apple.

Continue to Next Part

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