Netflix's New iTunes Billing Policy Will Curb a $256 Million Revenue Stream For Apple (venturebeat.com) 96
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.
Re: Yep, fuck iTunes. (Score:1)
Yeah, good riddance.
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I'm surprised they didn't do this already.
Also 15% of 853 million isn't 256 million its 128.
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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.
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Still $128 million just to funnel funds from one account to another seems a tad bit too much.
A typical credit card processor with that much in sales would take around 2%, or about $17 million.
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Does 'cutting out the middle man' save any money for the consumer? No.
While I pay for Netflix directly, I've bought some subscriptions, simply because it minimizes the steps to cancel once I'm done catching up on content (I'm looking at you, 'AMC Premier'). It also reduces my exposure to credit card fraud because , a single bill is easier to explore and I'm fairly certain that they cannot simply raise a price without an explict opt in on the new rate.
Re: Yep, fuck iTunes. (Score:1)
It might not mean a reduction in price for the consumer, but it could mean that Netflix has more money to produce more content ala Bright, BirdBox, Daredevil, etc.
If the customer is getting more for the same price, it still is a benefit, just not the same sort of benefit.
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A 1% cut is ok, a 15% cut is HIDEOUS
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Having the FREE app available in the Apple store or not (as a walled garden model) is an entirely different issue than using their 15%-off-the-top payment parasite. Conflating the two is exactly the sort of thoughtlessness I expect here.
However, I might expect Apple to be exactly as thoughtless and reactionary as you are being, I think we can maybe expect them to pull the app for some BS excuse of a reason. That's their M.O. to be sure.
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Then pull their app out of the store.
That really would trigger an anti-trust lawsu... oh, wait. No it wouldn't.
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Netflix is blowing up, iTunes is just sitting around collecting 15% checks and doing jack shit for the money. Netflix doesn't need that kind of distributor.
Then pull their app out of the store.
I've been a subscriber of Netflix for over 10 years, since I started streaming I've been using their apps on the Playstation 3 and 4, the Roku, an iphone, and an android device. But now if I want to use it on an ipad or something I'd have to eat (or netflix would, same thing) a 15% fee for content that's not going over Apple's network? That would be ridiculous.
Re: I am not going to spread my payment data (Score:2)
You have a subscription through Netflixâ(TM) website and had one for ten years. Unless Netflix says you canâ(TM)t use it with their iIS app, it will just work and you pay nothing extra. However, if you paid for a subscription through the iOS app, then Netflix (not you) paid 15% to Apple. Similar if you paid through a Google app, not through the website.
The only change is that Netflix is removing your ability to go through the iOS app.
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The other change is that you don't reward Apple for doing nothing. It may delay next Netflix price hike. It may allow Netflix to pay for a few shows.
Yeah - or they continue to put even more blatant product placement in their shows.
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You donâ(TM)t pay extra. The only change is that Netflix is removing your ability to go through the iOS app.
Well, what changes is that you can no longer pay your Netflix subscription with rebated iTunes cards - which means you actually pay more.
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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.
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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 bluf
Re: Can't imagine that will stand (Score:2)
Netflix agreed to the App Store rules, and the still do. Obviously itâ(TM)s up to them to write
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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?
Obviously enough that Netflix received over $800 Million a year just from those iOS users that paid for their subscription via the app.
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Obviously enough that Netflix received over $800 Million a year just from those iOS users that paid for their subscription via the app.
Using IOS to pay for Netflix and occasionally watch Netflix is not the same as watching Netflix exclusively on your phone. My guess is most of that $800 million will still flow to Netflix a different way. Netflix is likely making the same assumption.
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Obviously enough that Netflix received over $800 Million a year just from those iOS users that paid for their subscription via the app.
Using IOS to pay for Netflix and occasionally watch Netflix is not the same as watching Netflix exclusively on your phone. My guess is most of that $800 million will still flow to Netflix a different way. Netflix is likely making the same assumption.
Yeah. But they may be in for a rude surprise.
I don't pay by iTunes but this is good for me (Score:5, Insightful)
How long before Apple turns them off? (Score:2)
Since bypassing Apple for purchase of In-App services is against ToS; How long before Apple suspends the Netflix app in the iTunes store and disables existing installations on Apple customers' hardware with an error message indicating "This app is currently unavailable, because the creator, 'Netflix', is in breach of the Apple Developer Agreement" ?
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around the same time they start charging amazon for 15% of all amazon sales...
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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.
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You are using Netflix wrong.
Re:How long before Apple turns them off? (Score:5, Informative)
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).
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Apple does not require all apps to go through the iTunes store. I have plenty of apps on my iPhone and not one goddam instance of iTunes anywhere.
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Since bypassing Apple for purchase of In-App services is against ToS; How long before Apple suspends the Netflix app in the iTunes store and disables existing installations on Apple customers' hardware with an error message indicating "This app is currently unavailable, because the creator, 'Netflix', is in breach of the Apple Developer Agreement" ?
Apple is already skating on thin ice WRT anti-trust scrutiny. Probably not in their best interests to push their luck to the max.
Re: How long before Apple turns them off? (Score:2)
I have no idea what their app looks like, but I assume it starts with a page where you enter your Netflix username and password, and thatâ(TM)s fine. If thereâ(TM)s a butt
30% are simply robbery (Score:1)
A 30% margin which is standard in all kinds of app stores, Steam, Google, Apple, Microsoft is highway robbery pure and simple. That is the root of the problem here.
Even when Steam back in the day set this number, and all others followed it, it was high for what they provided. Steam was and still mostly is a monopoly so they can get away with it. Same for Apple and the others of course. However in this day and age these surcharges have no basis in reality anymore. A brick+mortar needs that 30% margin due to
Re: 30% are simply robbery (Score:2)
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They charge all apps 30% in the first year, 15% in successive years. Netflix doesn't get a special rate, and GP's comment about charging 30% is perfectly valid.
Netflix does get a special rate for the first year, 15%. GP's comment about charging 30% is wrong.
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I think you might want to look up ...
We're /. We don't usury look shit up.
Re:30% are simply robbery (Score:4, Insightful)
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.
Re:30% are simply robbery (Score:5, Insightful)
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.
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OK. given the iTunes store is around 50% apps that are free, tell me how Apple swims in money taking 30% of $0.
OK, now tell me how Apple swims in money taking 30% of a 99 cent app, which is around the majority of paid apps. (Or music, for example). That's around 29 cents for Apple, 70 cents for the developer or music label.
Of that 29 cents th
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Most "free" apps still earn revenue through ads or in-app purchases which obviously generate revenue for Apple too.
You cannot compare the payment transaction fees you pay at a retail store with Apple's: they are very likely to have special deals e.g. for massive amounts of small transactions and other discounts.
Not to mention that if you use Apple Pay the bank has actually to pay Apple back a percentage for the transaction...
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There is a huge difference between a storefront selling something and what Apple is doing. A physical storefront has to pay for shipping the getting the goods to the storefront as well as the physical store and the people to work at the store. Also, with a physical storefront, you generally have the choice of dozens of stores.
Lastly, manufacturers can sell directly to consumers, set up their own stores, etc.... Basically storefronts might double the price but they are providing a lot of value to the cust
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I'll give you unknown actual value to the customer and no competing storefronts, but not zero overhead (servers and managing payment isn't free by a long shot).
But the 30% / 15% or whatever Apple or Steam or whoever charges the publisher isn't based on their cost, or even the value to the customer - it's based on the value to the person wanting to sell. That's what value pricing means.
If I was a content creator 5 years ago and my choices were to hire a place to press media and stock shelves, roll my own sa
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There's also a huge difference between a storefront selling physical goods, and someone selling virtual goods. Selling virtual goods always has almost no overhead.
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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.
Retail stores have physical inventory to maintain. They need to pay people to stock shelves, man cash registers and manage supply chain. Comparing electronic copying of bits and bytes to retail stores is ridiculous.
At least I can go to most retail stores and buy the same shit. With these electronic distribution monopolies you have no choice. If you want something there is often only one place you can get it.
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.
Comparing retail with app stores is disingenuous.
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In the case of Netflix, it's not paying for a computer program as much as paying to rent movies and TV shows.
In the case of other categories of program that are traditionally proprietary, such as jurisdiction-specific tax preparation tools and video games, how else would you recommend to cover the cost to house the developers?
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such as jurisdiction-specific tax preparation tools
I would imagine it's in the interest of that jurisdiction to ensure that people complete their tax returns accurately, so they should fund the development using some of the tax revenue.
STOP IRS TAKEOVER campaign (Score:2)
it's in the interest of that jurisdiction to ensure that people complete their tax returns accurately
Not necessarily for two reasons. First, it's in the government's interest for people who are entitled to deductions or credits to miss those deductions or credits. Second, it's in the (conflicted) interest of the members of the legislature to stay in office. Big tax preparers like Intuit and H&R Block have spent big bucks to convince legislators that only dirty commies would take tax money to drive private-sector tax preparers out of the market. (Source: "How the Maker of TurboTax Fought Free, Simple Ta [propublica.org]
Consoles are easy (Score:2)
It's seriously strange, right out of the videogame console world or some bullshit like that.
Why do people put up with it on video game consoles in the first place? Because consoles are harder to screw up [pineight.com] than a personal computer. Likewise with iOS devices.
Apple under attack from all corners (Score:1)
Man, rough times are in store for Apple ahead.
Netflix shutting down any form of collaboration (not that Apple added any value for what Netflix paid them)
Qualcomm blocking their sales in Europe
Chinese demand down due to their prices being too high and increased competition
Netflix kicking them to the curb
And a class action suit stating that the walled garden they put up for the App Store is harming consumers that reached the Supreme Court: https://www.wsj.com/articles/apples-app-store-under-fire-in-supreme-c
Re: Apple under attack from all corners (Score:2)
Re: Apple needs to remove Netflix app (Score:2)