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Netflix's New iTunes Billing Policy Will Curb a $256 Million Revenue Stream For Apple (venturebeat.com)
Early last year, Netflix allowed some iOS users in more than two dozen markets to bypass the iTunes payment method as part of an experiment. The streaming company is now incorporating the change globally, curbing a $256 million revenue stream for Apple. "According to new data compiled by Sensor Tower, Netflix grossed $853 million in 2018 on the iOS App Store," reports TechCrunch. "Based on that figure, Apple's take would have been around $256 million, the firm said." The new policy change allows Netflix to avoid paying the 15% levy that Apple charges on in-app subscriptions. From a report: "We no longer support iTunes as a method of payment for new members," a Netflix spokesperson told VentureBeat. Existing members, however, can continue to use iTunes as a method of payment, the spokesperson added.
The company did not share exactly when it rolled out the change globally, but a support representative VentureBeat spoke with pegged the timeframe as late last month. Additionally, the support rep added that customers who are rejoining Netflix using an iOS device, after having canceled payment for at least one month, also won't be able to use iTunes billing. The move, which will allow Netflix to keep all proceeds from its new paying iPhone and iPad customers, underscores the tension between developers and the marquee distributors of mobile apps -- Apple and Google.
The company did not share exactly when it rolled out the change globally, but a support representative VentureBeat spoke with pegged the timeframe as late last month. Additionally, the support rep added that customers who are rejoining Netflix using an iOS device, after having canceled payment for at least one month, also won't be able to use iTunes billing. The move, which will allow Netflix to keep all proceeds from its new paying iPhone and iPad customers, underscores the tension between developers and the marquee distributors of mobile apps -- Apple and Google.
I'd rather that money to go to buying more content for me then to Apple for a minor convenience service. You could license a lot of shows/movies for that and/or make more.
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Good luck with that, Apple. Disable Netflix on all those AppleTV devices.... go ahead..... see how much heat Netflix gets over it as opposed to how much heat Apple gets....
I am guessing that Apple would basically be shooting themselves in the foot on that deal.
My eyes reflect the stars and a smile lights up my face.
Also 15% of 853 million isn't 256 million its 128.
Glad someone pointed that out. Also worth noting, this only affects new subscriptions or people who let their subscriptions lapse. Existing subscriptions are unaffected, and likely will be for the foreseeable future, so it’s not as if that $128 million is drying up overnight.
It's not in breach of Apples TOS - what Netflix is doing is allowed and has been since day one, see Amazons Kindle app which does the same (can't buy books or take out a Prime subscription through it, but can consume paid for content via it).
You must really hate buying anything from a retail store then. Typical markup in a retail store is "50%" - which is phrased to be purposely misleading. Markup in retail is "the percent of the retail price which is the markup." So retail markup is to double the retailer's cost.
30% originally was therefore a really good deal - a producer getting 70% of sale price rather than 50% is much better than putting stuff on a retail shelf.
The market is currently in another price discovery stage, where companies are now able to put in place their own infrastructure or be able to support lower rates than 30%. Trying to vilify companies offering storefronts for using value pricing (which is what every sales organization ever does if they want to stay profitable) is disingenuous.
"There are a dozen opinions on a matter until you know the truth. Then there is only one." - CS Lewis (paraprhase)
I think you might want to look up ...
We're /. We don't usury look shit up.
It little behooves the best of us to comment on the rest of us.
The reason retail stores have such high markups is because they also have pretty high costs. You cannot compare them to a digital store, where costs are much lower. A retail shop with 50% markup might barely survive, where a digital store would swim in money...
This is especially true for an application like Netflix, where the actual content is not hosted by Apple, only the application is. The Apple Store merely provides the download for the application plus updates and manages payment transactions: these costs are marginal at best and not nearly enough to justify a 30% cut the first year, nor the 15% cut subsequent years.
I can't imagine Apple allowing that sort of behavior to stand.
All they would have to do is pull the app from iTunes. They aren't required to provide the user base to Netflix for nothin ya know.
What percentage of people watch Netflix exclusively on iOS? My guess is even if they pulled the app, most people wouldn't care because they are using a roku, a smart tv, or some other non-ios app to watch Netflix.
I am surprised though that Apple and Netflix didn't negotiate the rate down to something more reasonable like 5%. It would seem to be beneficial to both of them to negotiate this rate. My guess is that they did try to secretly negotiate and this is just each side trying to call each other's bluff. Either that or Netflix is starting to see Apple as a competitor and has decided that giving any money to a competitor is bad.
I am not going to spread my payment data
Get a credit card that lets you create new virtual cards with date and dollar limits. Create a virtual card for Netflix for the amount of your annual subscription. Renew via Netflix website. Done.