Disney and Apple have enjoyed a close relationship for years. For a long time, Apple founder and former CEO Steve Jobs was Disney's largest individual shareholder after selling Pixar to the company in 2006 and he held a seat on Disney's board until he passed away in 2011. In addition, Disney was the first company to sell shows via Apple's iTunes store.
While both are iconic American companies, the two had little overlap in terms of the industries they compete in. Even when it came to media, Disney provided content, and Apple was simply another distribution platform--until now.
That's because both are about to go head to head in the streaming wars, with each set to launch competing services this November. As a result, Disney's CEO Bob Iger, who held a seat on Apple's board, resigned last week after Apple announced pricing for its Apple TV+ service that undercuts Disney's own Disney+.
To be fair, Iger really didn't have a choice. You can't sit on the board of a company that is in direct competition with the company you lead as CEO.
Playing It Nice
Both parties made a point of heaping praise on the other, with Iger telling The Hollywood Reporter, "Apple is one of the world's most admired companies, known for the quality and integrity of its products and its people, and I am forever grateful to have served as a member of the company's board."
For its part, Apple said in a statement of its former board member: "While we will greatly miss his contributions as a board member, we respect his decision and we have every expectation that our relationship with both Bob and Disney will continue far into the future."
Both Companies Mean Business
While I'm sure there is real professional respect between the two, there's also a real battle coming. For Disney, launching a streaming service gives it the ability to monetize what is probably the world's most valuable library of content including classic Disney films, the Star Wars franchise, and the Marvel universe. Previously, it depended on licensing deals with third-parties like Netflix to deliver those movies and shows, but soon it can stream them itself.
For Apple, its TV+ launch represents the company's increased focus on monthly subscription services, along with Apple Music, and its new gaming platform, Arcade. Apple's services division is becoming the company's most significant driver of growth, especially as iPhones have slowed in recent quarters. Those services not only generate revenue on their own, but also create added value within Apple's ecosystem of products, making it more likely for customers to want to stick around.
An Even Bigger Battle
As the streaming wars heat up, what no one knows is exactly how much fracturing consumers will put up with. How many different services will one family need? Will they sign up for four or five different services in order to have access to all of the content they love or, will there be definite winners and losers?
In that scenario you end up with some platforms succeeding in capturing a wide enough audience to remain viable, while others fade without the critical mass to support the massive spending on original content required to satisfy audiences. Neither Apple nor Disney are in this to end up a loser--and both are aggressively leveraging their existing customer base to generate subscribers.
While losing Iger is certainly a direct casualty of the streaming wars, it's also completely normal. Often your best partners become your biggest competitors. That doesn't mean you shouldn't build relationships that can help your business. It just means that it's important to understand that those relationships aren't going to stay the same forever.
It's not personal, after all. It's just business.