In the lead-up to the announcement that finally happened on Monday, HBO’s deal with Apple Inc. (NASDAQ:AAPL) was in talks for almost a year.
Back in the springtime 2014, a few months before HBO made announcements of selling itself as a pay channel, the company’s CEO Richard Plepler had reached out to Apple’s media head Eddie Cue, via an intermediary. The purpose was to ascertain if Apple were ready to sell HBO’s services on the Internet.
Apple, certainly, did give the nod to the proposal and a deal for HBO Now came about pretty quickly.
Pros of the deal for both companies
The deal, as it stands, will prove to be a massive advantage for both business houses.
Firstly, HBO, which has basically zero experience in selling directly to customers, will get support from Apple which has close to 400 million credit cards on file already. Besides, there will also be customer support available from Apple. There’s also talk that billing queries will be handled by Apple while support for services will be provided by both companies together.
As for Apple, they received a huge boost by selling one of the best media brands. Also, the pay it is going to get from HBO, in order to promote the service, and from the sale of Apple hardware that will be supporting it, such as iPhones, iPads and Apple TV. Web browsers will also support the service via the HBO website.
Money is also likely to be at stake, in the deal. Apple generally charges a 30% fee for selling subscriptions via the iTunes store. Besides this, it also has deals with Netflix and Major League Baseball in place. It is highly possible that Apple will charge more than the current 30% fee, when it sells HBO. Apple will also get a three-month exclusive window to sell the product, although this doesn’t apply to pay-TV distributors that already offer HBO.
Three months after HBO Now launches next month, other digital distributors in the business will also be able to sell it.