Government and Leading TV Networks Raise Concerns Over Amazon’s 30% Ad Revenue Cut Policy

Amazon’s Fire TV Policy of Charging 30% Ad Revenue Sparks Controversy Among Australian Broadcasters

Australian terrestrial broadcasters have expressed concern over Amazon’s request for 30% of ad revenues from content watched on its Fire TV devices. This move has led networks such as Seven, Nine, Ten, and SBS to label Amazon’s demands as “rent-seeking” and a mere “cash grab”.

In its updated terms, Amazon requires app owners to remit 30% of ad revenues if their content accrues more than 30,000 viewing hours in a month on the Fire TV platform. Broadcasters have recently become aware of these changes, even though Amazon proposed them several months ago.

The issue has added significance as Fire TV currently holds Australia’s 4% market share. Broadcasters fear such demands could influence other dominant market players to follow suit if left unchecked.

The global terms, updated in June, caught the major Australian broadcasters off guard when they were informed only a few weeks ago. In response to the concerns, an Amazon representative stated that the revenue is crucial for enhancing the Fire TV user experience. This approach has been consistent in the U.S. since 2018, aiming to standardise business practices globally.

Based on Fire TV’s present market share and the existing streaming advertising market value, Amazon’s share could amount to approximately $5 million annually from these networks.

There’s growing apprehension that this move could pave the way for other prominent TV OS manufacturers, like Google’s Android and Samsung, to demand significant revenue cuts. With traditional TV viewership dwindling, local broadcasters believe they require governmental assistance to remain competitive against streaming giants such as Netflix and Disney, preserving their essential role in Australian culture.

Amidst this backdrop, the government is contemplating laws ensuring prime positioning for local networks on Internet TV interfaces. This would deter system makers from charging for app placements. 

Communications Minister Michelle Rowland noted the government’s concern over Amazon’s sudden pricing decision for app providers on Fire TV. She highlighted the invaluable role of free-to-air services in Australia and emphasised the need for a well-thought-out strategy. 

James Taylor, the managing director of SBS, criticised Amazon’s decision, calling it “outrageous”. Meanwhile, Free TV, which represents networks like Seven, Nine, and Ten, echoed the sentiment of a “cash grab”.

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Indian OTT Platforms Wage a War with Google’s Billing Policy

In parallel to Amazon’s revenue-sharing decision, Google also introduced policy amendments. In September 2020, Google declared that app developers distributing Android software via the Google Play Store would be mandated to utilize its in-app payment mechanism from the subsequent year. 

This proclamation gave developers until September 30, 2021, to integrate with Google’s billing system. Notably, this system levies a 30% transaction fee, compelling developers to abandon independent payment systems. This change was especially significant for subscription-driven digital enterprises.

Interestingly, Google’s new regulations mirror Apple’s App Store payment policies. The latter has faced considerable examination from developers and regulators, particularly concerning its 30% commission. When compared, independent payment gateway vendors only impose a 2-3% transaction fee, a stark contrast to Google’s hefty 30%.

This policy shift hasn’t gone unnoticed. The Indian Digital Media Industry Foundation (IDMIF), representing many prominent streaming platforms in India, registered a grievance with the Competition Commission of India (CCI), objecting to Google’s app store billing approach.

Ragul Thangavel
Ragul Thangavel
Staff Writer

With over nine years of diverse professional experience, Ragul has made significant contributions across various domains, including Media Operations, OTT Technologies, Video Production, Ecommerce, and Social Media.

Holding an Engineering degree, Ragul's career took an unconventional turn when he discovered his passion for writing, leading him to begin his journey as a content writer.

His career has been exclusively dedicated to the growth and development of startups, where he has played a pivotal role. His unique blend of technical knowledge and creative prowess has enabled him to drive innovation and success in every venture he has been a part of.

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