The past couple years have seen increasing tension between app developers and app marketplaces like the iOS App Store and Google Play Store. Apple and Google customarily take a 30 percent of all in-app purchases when those apps are hosted on their stores, and a 15 percent cut of any subscription fee.
Today, VentureBeat reports that Netflix, which reportedly generates hundreds of millions of dollars for Apple every year, has formalized a warfront wherein all subscription sign-ups must now go through the Netflix website, rather than through the iOS app. Netflix experimented with this design in certain markets around the world in 2018, and now they'll pulled the lever that makes it global.
Current Netflix customers who use iTunes billing to subscribe will continue to be charged through that method by default. To check iTunes billing info in iOS, open the App Store app, then tap on your profile picture, then your name, then Subscriptions. You may be prompted to provide your Apple ID password when you tap your profile pic.
Netflix removed the in-app subscription option from the Android version of their app last year, though you may still be getting billed through the Google Play Store.
Why is Netflix removing in-app subscription sign-ups?
When a company takes a significant cut of your revenue to deliver your product to customers, you usually have two choices: Charge more to cover the cost, or eat it in a way that still lets you maintain profitability. But if your app has a lot of competition, raising your fees may not be a viable option. In the case of Netflix, there's a lot of pressure to maintain price parity with rival services like Hulu or Amazon Prime Video.
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Meanwhile, Google and Apple are the de facto delivery people for Android and iOS, respectively. So you must go through them to get your app in front of potential customers. There's effectively no one else to negotiate with on distribution costs. If you don't go through them, and you don't have a recognizable name, your odds of success are extremely limited.
However, if the store only takes a cut on transactions that occur within the app, then you can get around that with a website-based subscription process. It requires more steps -- and the app store in question may be relying on the weight of this inconvenience -- but if your product is compelling enough, customers may be willing to meet you in the middle.
The additional effort required by Netflix will probably cost it a few customers in 2019, but the net loss may get erased if they can convince enough people to help them bypass Apple's sizeable cut of the action.
- Netflix has ended in-app subscriptions on iPhones and iPads for new customers. Users who previously signed up this way will continue to be billed through iTunes, but new customers must now go through Netflix's website.
- Netflix has made this move because Apple takes a 15 percent cut of all subscription fees for apps that are hosted on its App Store, which reportedly costs Netflix hundreds of millions of dollars a year.
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