In August 2018, it emerged that Netflix was testing a new subscription method for its iOS app, with people directed towards its mobile website to enter their payment details. That avoided Apple’s system of in-app purchases, and thus the company’s 30% cut of subscriptions (which falls to 15% after a subscriber has been paying for a year).

A few months on, and Netflix isn’t testing any more: it’s making this strategy global for all new members. “We no longer support iTunes as a method of payment for new members,” a spokesperson told VentureBeat, which first reported on the change.

Apple has always allowed companies to charge subscriptions directly, but it has also been strict about companies not promoting those direct subscriptions from within their iOS apps – a policy that also applied to one-off purchases like Kindle e-books. Netflix’s move is a challenge to that policy, as was Spotify’s decision last summer to discontinue iOS in-app purchases for its new subscribers.

Analyst Gene Munster of Loup Ventures has been calculating the possible effects for Apple. “We estimate apps account for 40% of Services revenue, and 20% of app revenue comes from in-app subscription purchases, of which at most 5% come from Netflix and Spotify,” he wrote. “If Apple loses their cut of all Netflix and Spotify subscription revenue long-term (not just new subscriptions), it would reduce the overall Services revenue by about 0.4%, and Apple’s overall revenue by 0.07%.”

EarPods and phone

Tools: platforms to help you reach new audiences

Tools: Kaiber

In the year or so since its launch, AI startup Kaiber has been making waves,…

Read all Tools >>

Music Ally's Head of Insight

Leave a comment

Your email address will not be published. Required fields are marked *