For about the past three years, Netflix has allowed iPhone, iPad, and Apple TV owners to pay for a streaming subscription through iTunes as a matter of convenience. Now, however, that is no longer an option for new users. While existing subscribers who already pay for Netflix through iTunes may continue to do so, Netflix has stopped offering it as a payment option for new members.
Netflix actually started incorporating the change earlier this year in select markets. Apparently satisfied with the outcome (i.e., iOS users have likely shown they're willing to jump through an extra hoop to pay for Netflix), the change is now being rolled out globally.
"We no longer support iTunes as a method of payment for new members," a Netflix spokesperson told VentureBeat, adding that it rolled out the change globally sometime last month.
It's not difficult to figure out why Netflix would do this. Apple and Google both charge a 15 percent royalty for in-app subscriptions. Netflix already stopped allowing subscribers to pay for its service through the Google Play store back in May, and now it's done the same thing with iTunes, in order to avoid forking over a 15 percent chunk.
This is a bold move by Netflix in some respects. Apple lists Netflix as the third highest grossing app in iTunes, behind Pokemon Go (No. 2) and Fortnite (No. 1). SensorTower breaks things down further and claims that Netflix raked in $52 million in revenue through iTunes last November. Assuming Netflix can maintain that figure over the course of a year, that works out to $624 million. At that rate, Apple would collect $93.6 million from its 15 percent store tax.
That's a substantial sum that Netflix stands to save by forcing iOS users to visit its website to sign up and pay for service. How Apple reacts, if at all, remains to be seen.
Netflix is the not the first to bypass an app store's tax rate. Epic Games notably decided not to launch its wildly popular Fortnite game in Google Play and instead distribute the Android version through its website, to avoid giving Google a cut of in-app purchases.
This could be a trend if Apple and Google don't show a willingness to lower their royalty rates, either across the board or on a per-app basis. Likewise, it could set the stage for a war of sorts, if Apple and Google to kick certain apps from their respective stores.