Netflix capitulates to Apple; in-app subscription now available

“Available to download on the App Store since the latter half of 2010, Netflix has finally caved and is now giving iOS users the option to subscribe to its movie and TV-streaming service, directly, on either iPhone or iPad,” Arron Hirst reports for RazorianFly.

“Netflix will have to swallow the 30-percent cut per subscription that it has for so long tried to avoid, and that Apple demands developers who use the App Store’s in-app subscription system – pay,” Hirst reports. “Despite Apple’s required cut, however, Netflix will still cost $7.99 per month when purchasing a subscription to the service directly, on iOS.”

Hirst reports, “Netflix is an initially FREE download from the iOS App Store, and now contains a variety of in-app subscription options to choose from.”

Read more in the full article here.

“In a few cases, Apple has reduced its contentious tax, allowing a handful of subscription services to pay a cheaper rate,” Rich McCormick reports for The Verge. “Earlier this year, Recode reported that Apple was only charging high-profile streaming companies — including Netflix, Hulu, and MLB.tv — a 15 percent tax rate for subscribers who signed up through Apple TV, rather than the typical 30 percent. It’s not yet clear whether Netflix was offered a similar deal for sign-ups coming from its updated iOS app.”

Read more in the full article here.

MacDailyNews Take: Wow, it only took Netflix five years (and a new, massively-featured Apple TV – with an Apple subscription content service looming) to wise up.

16 Comments

  1. This use of the “tax” word is just dumb. If anything, it’s a “commission” paid to the store owner — Apple. Sellers can complain all they want about what Apple charges to allow them to do business in Apple’s heavily trafficked store, but it is definitely not a levied tax. It’s the cost of opportunity. Opportunity to get one’s products in front of proven group of buying customers. Taxes are unavoidable. Being on the App Store is strictly by choice.

      1. Yes. There is a big mall just down the street. I’d like to sell my merchandise there because it’s where everyone goes. I’ve told the management that I could earn more profit if they would only let me set up shop rent free. So far they have declined my request.

  2. What am I missing? I subscribe to Netflix outside the Apple ecosystem and I can stream their content just fine on the Netflix app on my iPhone. So why would Netflix feel the need to offer in-app subscription?

    1. Many people will discover Netflix for the first time on their iOS device. Many more will, knowing about Netflix, download the app on their iOS device and sign up directly through the app. This is where Apple gets commission from that subscription. The beauty (for Apple) is, this is not a one-time in-app purchase; this is a recurring cost that, once made through the App, instead of Netflix web site, remains forever (or, for as long as that person is a subscriber).

      1. I think what JWSC is getting at is that Netflix could have easily indicated to the user when they tried using the Netflix App that they would need a Netflix Account. Most if not all users of streaming services know how to use a browser to go to a site as popular as Netflix to set an account up and pay for a subscription. There really was not as much incentive (assuming a 30% commission) for Netflix to do an in-App subscription in comparison to a less known streaming service..

    1. ???

      How do you propose Apple cover the expense of hosting and promoting Netflix app, managing the user account, the payment processing and other back-end stuff?

      People do question the reasoning behind 30%, and some argue that it is too steep. Perhaps it is, perhaps it isn’t; some developers are quite happy and don’t mind the 30%, others aren’t quite thrilled that almost a third of money their app earns goes to Apple. But nobody argues that Apple shouldn’t get any money from selling apps on their store. This would be like expecting Walmart to sell everything at wholesale prices, with zero profits.

      1. I agree except…Apple hosts the app now that a person can subscribe directly to Netflix without Apple getting any money. This “capitulation” is Netflix preparing “damages” when Apple loses this case. The “consignment shop” argument will work if Apple were to get money via either licensing scheme or neither, but where they get it one way the subscription is ordered but not the other, will be struck down in court.

      2. Apple hosts the app, but most of the cost is NOT in hosting the app. Netflix has had a web interface for ages. Most of the cost is in streaming.

        If I were Netflix, I’d offer in-app purchases for iOS streaming only. Make it super obvious that if you want to stream on your TV ( except via AirPlay ) that you need to subscribe on the web.

        It’s likely that Netflix is just trying to add marketshare. If it’s TOO successful, they can also raise prices on the in-app purchase. People wouldn’t like it… or they wouldn’t care. Those that wouldn’t care will keep paying Apple 30%, those that care will migrate to signing up online.

        1. Well, not so fast. Apple’s developers contract prohibits developers for charging more in-app than they do outside the iOS. In other words, you have to keep the exact same pricing regardless of where you sell your app or service.

          Limiting the in-app subscription to iOS would likely be possible, but its effect would be rather negligible. After all, those who buy in-app (either on an iOS device, or on AppleTV) are doing it because these are the only devices they’ll be using to watch Netflix; in other words, the likelihood that any of them may be using a Netflix app on their smart TV (not to mention, on the desktop computer) is very minimal.

          1. You make a good point. This is potentially Netflix reaching out to the non-TV generation. They may see the cut in revenue an acceptable sacrifice to make to get a younger ( potentially more sticky ) generation to subscribe to their service. In some cases, we’re talking about people who may not even HAVE traditional computers. Rather, they watch everything on their phone or tablet.

            Where Netflix loses is where people subscribe via iOS for its convenience… and then watch it on many screens. Or because of privacy/security issues ( handling over your credit card details as credit card breaches are more and more frequent )

            My guess is that Netflix has a core set of users so that this is a pure digital real estate grab, but who knows.

        2. That’s an interesting idea.. If Apple allows Netflix to co-use the same distributed Apple servers that iTunes uses for streaming their videos I don’t see Netflix complaining over the 30% commission. I’m sure all the media companies (magazine, ebooks, streaming, news) would love to avoid the 30% in-app subscribe by offering their iOS app at their own website, but due to iOS devices being restricted (unless jailbroken or via developer licence) to acquiring Apps from the Appstore there really is only agree to the 30% or not have in-app purchasing. I suppose as you say Netflix could have a separate mobile-only streaming (smartphones and tablets) if purchased in-app and also have a any device streaming if purchased via website, then keep the price the same. The incentive for the end-user then would be to go to the website if they want streaming for everything. Netflix could write their app to detect if an Apple TV is being used (or iOS device being connected to a TV/video out) and simply return a message that a subscription must be purchased via the website for streaming to a TV.

    2. Netflix needs to do something. Their ability to obtain quality content for streaming is slipping drastically. 98% of the movies they get are ones I’ve never even heard of and rated at 2 Stars and below.

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