Netflix, Hulu Opt Out Of Apple Video Service

As Apple finalizes its new streaming video service, sources say that Netflix and Hulu are not expected to participate in it.

Apple’s service, which will feature free original content for device owners and a subscription platform for existing digital services, is set to launch in April or early May. Customers will be able to watch content from a variety of sources all within the iOS TV application.

Sources told CNBC that while Netflix and Hulu won’t be a part of the service, Starz; CBS, which owns Showtime; and Viacom are expected to offer streaming services on the Apple platform. HBO may also join the service, but is still in discussions with Apple.

One sticking point could be that Apple wants to keep 30 percent on every customer that subscribes to an over-the-top video service — a significant increase from the 15 percent it currently takes from customers that sign up to streaming apps through the App Store.

“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,” CEO Tim Cook said on an earnings conference call last month. “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.”

In addition to its deal with Oprah Winfrey, Apple has also signed on Reese Witherspoon, Steven Spielberg and other Hollywood heavyweights to give its users access to both film and TV content for no additional charge. Apple is also planning to offer its original content free to device users.