Netflix cuts Apple out of its cut of subscription fees for new and rejoining subscribers

Netflix cuts Apple out of its cut of subscription fees for new and rejoining subscribers
According to the Netflix billing FAQ page for iTunes (via Venture Beat), new and rejoining members of the streaming video app for iOS will no longer be allowed to pay their subscription fees inside the app. This decision comes after Netflix removed the in-app subscription option for the iOS app in over two-dozen markets as a test. Late last month, the streaming content provider quietly made this change globally. A Netflix spokesman said, "We no longer support iTunes as a method of payment for new members."

Existing iOS subscribers will still be allowed to make in-app payments as long as they haven't canceled their subscription for a month or longer. If you're curious why Netflix is doing this, it is because Apple (like Google) takes a 15% cut of subscription revenue generated in-app in the App Store (down from 30% a couple of years ago). Back in May, Netflix stopped allowing new and rejoining Android users to pay inside the Netflix app found in the Google Play Store. Those iOS users interested in subscribing to Netflix for the first time, or who want to subscribe again after an absence of a month or longer, will have to do the same thing that Android users in the same situation do; they go to the Netflix website to sign up and pay.

Plenty of money is as stake here. After all, Netflix remained the top grossing app last month among all apps in the App Store and Google Play Store combined. It also was also the top revenue producing app in the App Store alone.

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31 Comments

1. middlehead

Posts: 458; Member since: May 12, 2014

Good. Neither Apple nor Google deserves any piece of a subscription they've got zero part in delivering.

3. splus

Posts: 160; Member since: Nov 26, 2011

But then they DO have a part in delivering the app itself, which is substantial. And if the app is free then neither Play or App Store make any money on it. My guess is that both stores will think of some other solution for such cases - why would they list a free app on their stores that makes money but they don't get a cut?

4. L0n3n1nja

Posts: 1576; Member since: Jul 12, 2016

Plenty of other free apps in the play store helping companies make money, where would you draw the line. Besides I doubt either Google or Apple would want Netflix removed from their app store. It's a very popular app and just ask Microsoft how lacking popular apps turned out.

5. bambamboogy02

Posts: 840; Member since: Jun 23, 2012

About time they got smart. Why should Apple or Google get a cut of others revenue? They only host the app, just like the million others.

6. splus

Posts: 160; Member since: Nov 26, 2011

That's a ridiculous statement. Should any grocery shop not make any money and sell all the stuff for exactly as much money as they get it for? I'm not saying App stores should take as much cut as they do now, which I think is too much! I'm saying I suspect both Apple and Google will find some other mode of sharing for big apps and games, such as Netflix and recently Fortnite.

21. RebelwithoutaClue unregistered

We're talking about subscriptions here, not buying an actual app. Would you be fine with a grocery shop taking 15% cut of a magazine subscription just because you bought the initial magazine in the shop? Besides, it's not like they are doing something illegal here, it's not mandatory to offer subscriptions from within the app.

28. strategic_developer

Posts: 1627; Member since: Jul 17, 2018

Don't waste your time with him. He doesn't understand the difference. To him a purchase is a purchase.

39. NarutoKage14

Posts: 1327; Member since: Aug 31, 2016

That would be an acceptable model. Give the app store their cut with only the first month or two of subscription.

37. bambamboogy02

Posts: 840; Member since: Jun 23, 2012

Grocery stores purchase product at what ever cost, and sell it for a marked up price for a profit. Apple and Google don't purchase apps for their app stores. Google and Apple do nothing but host apps that the developers make for the respective platforms. Why should either company get any money from any subscription service they have no part in? All subscription apps should be set up independent of either company getting money. These apps get no extra benefit from other free apps either company is hosting.

38. NarutoKage14

Posts: 1327; Member since: Aug 31, 2016

Maybe because hosting and delivering those apps costs them money.

43. bambamboogy02

Posts: 840; Member since: Jun 23, 2012

If hosting apps is an expense, it's not an app developers fault, especially down the line. That's being far to greedy. Google and Apple boosted about having more apps at one point, remember that pissing contest? More apps per platform means more users on that OS, which in turn produces $$ for the respective platforms on their business models. How is it fair that a free app can be hosted and treated the same as one that Google or Apple is receiving a revenue cut from. What extra service/promotion/product placement/preference advertising on the App Stores are they giving those apps that the free ones are not getting?

31. izim1

Posts: 1600; Member since: Feb 04, 2013

Microsoft never had issues growing nor a lack of apps. Unless you mean their failed winmo platform. In which case, Apples and oranges. That's what youre trying to compare by bringing it up. Remove from app store =/= completely lacking from the OS. Specially with android where you can easily sideload apps. Netflix would have next to no problem just offering the app on their site if Google removed it from their android app store. Same for hulu and hbo and any other major subscription based streaming service that currently has an app in the google app store. Wouldn't really hurt google at all of they removed it from their app store.

33. Atechguy0

Posts: 918; Member since: Aug 03, 2018

Since day one Android users could always bypass Google's cut for Netflix. Apple is the one that doesn't allow anyone to bypass their fees, especially if an app requires monetization.

26. strategic_developer

Posts: 1627; Member since: Jul 17, 2018

You don't have to download any app through Google Play. Many APKs for apps that are free to download, are available wverywhere. Both Netflix and Spotify made good moves. Since Android apps can be downloaded via the browser, like every OS accept iOS can do, all these files should be made available on the site of the developer.

2. lyndon420

Posts: 6822; Member since: Jul 11, 2012

It's available through my cable tv provider. I'd much rather give Netflix their money directly, as opposed to sacrificing a big chunk to those who simply host Netflix's app!! Netflix can stand on their own if they choose to do so...no need for Google or Apple!!

29. strategic_developer

Posts: 1627; Member since: Jul 17, 2018

True. But it doesn't help you any when you aren't in front of the TV.

7. Peaceboy

Posts: 640; Member since: Oct 11, 2018

App store is like a mall, you need to pay in order to sell your apps whether its free, in app or subscription. Anyway I want apple to have its own video streaming regardless of its price.

10. ZerosAndOnes

Posts: 84; Member since: Oct 12, 2018

The issue is the mall has actual costs, tons of costs. All Apple needs is a server to host the apps. I highly doubt there is a mall where you pay billions just to have a spot. The money Apple & Google get from big apps is huge and nowhere near a cost of a physical store being hosted in a mall.

16. vincelongman

Posts: 5723; Member since: Feb 10, 2013

Also cities have heaps of malls Apple/Google have monoploies on their respective malls (except China for Google) Hence its not a fair comparisons with mall fees Apple/Google should not be allowed to abuse their respective monoploies and take such a big cut Especially subsrciptions like Netflix, where all Apple/Google do is host an ipa/apk file and provide means for payment Subsrciptions like Netflix should be 1% like credit card fees IMO For apps/games maybe 5-15% like service taxes Apple/Google are lucky to still have these monoploies, the FTC really should force more competition e.g. -Cross-licensing so all apps bought are synced App Store and Play Store. Makes switching between iOS and Android easier, promoting competition -Allow third parties to sell redemption keys like with Steam. Promotes competition, hence Amazon/Humble Bundle/etc can offer apps/games at discounts

42. NarutoKage14

Posts: 1327; Member since: Aug 31, 2016

Do you know how much a server costs? Do you know how many servers they need?

47. bambamboogy02

Posts: 840; Member since: Jun 23, 2012

Why should I care what it cost the OS maker to host app they want developers to provide and produce? And now if it is costing them money to host, why id that th3 developers problem? It's like a any store hiking up pricing to pay to expand because it doesn't have a big enough warehouse for all the products. Would you oay more for those items or purchase them somewhere else at a better price? (Common sense you buy where cheaper).

12. Vokilam

Posts: 1273; Member since: Mar 15, 2018

I think NETFLIX just bit the hand that (partially) feeds it.

35. tedkord

Posts: 17410; Member since: Jun 17, 2009

No, they bit the hand that's taking part of their food from them.

22. RebelwithoutaClue unregistered

So if you get a contract with T-Mobile at the shop inside the mall, you think it's normal the mall gets 15% of that subscription money? Remember they have to pay $99 a year just to be able to publish in the Appstore.

9. zennacko unregistered

Now here's the Devil's Advocate with the other side: iTunes gift cards can be bought up to 20% off, which effectively translates into 20% off your Netflix subscription. I don't care if Apple, Facebook or the president are taking their cuts, I use capitalism to my favor, and as there isn't any better deal to make me get Netflix as close to "truly free" as it could go (T-mobile ONE not an option) then 20% off forever seems good enough for now. And I guess that's what made some executives mad, once you devalue/discount something, nobody's paying MSRP on that again.

11. ZerosAndOnes

Posts: 84; Member since: Oct 12, 2018

I highly doubt Netflix pulled the payment from app store cause apple was offering gift cards with 20% discount. The loss was on Apple's side and not on Netflix for it to care. And i highly doubt big enough percentage of people pay their Netflix via gift cards.

18. Awalker

Posts: 1981; Member since: Aug 15, 2013

"Back in May, Netflix stopped allowing new and rejoining Android users to pay inside the Netflix app found in the Google Play". That doesn't seem to be accurate. I can still sign up for Netflix through the Android app.

23. cmdacos

Posts: 4259; Member since: Nov 01, 2016

Smart move Netflix. A key reason why I left apple years ago was the force of re-upping subs through Apple to simply pay an Apple tax. I know it's not as stringent now but Apple doesn't add any value to your app when you are the most popular option out there.

25. strategic_developer

Posts: 1627; Member since: Jul 17, 2018

Good! Apple should get a dime when they don't do the work. What they should get is a fair merchant payment acceptance fee of no more than 5% of the purchase for a purchase that is 4.99 or higher. They shouldn't get even a penny from any app costing $.99 or less.

30. pogba

Posts: 112; Member since: Jun 13, 2018

It's not bad if Apple/Google get a cut out of in app subscriptions. The problem is 15% of every transaction is just too much. Especially considering that they have nothing to do with the app, they're just hosting. Maybe they could just charge Netflix a specific sum and let them do their thing. I don't blame Netflix for taking that route.... I mean, I would too.

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