Netflix exits App Store, Apple as a service theme intact

“We believe the investing view on Apple is shifting to Apple as a Service,” Gene Munster writes for Loup Ventures.

“The news that Netflix is leaving the App Store is somewhat expected, given the company began testing alternatives to the App Store last summer. The move is a fractional negative to earnings, along with a psychological headwind to investors embracing the theme of Apple as a Service,” Munster writes. “That said, we believe Spotify is the only other brand at risk of leaving, and the Apple as a Service theme is intact.”

“Netflix leaving the App Store only affects new subscriptions, therefore, the financial impact on Apple will be de minimis (0.07% of Apple’s overall revenue and 0.14% of earnings),” Munster writes. “If Apple loses their cut of all Netflix and Spotify subscription revenue long-term (not just new subscriptions), it would reduce the overall Services revenue by about 0.4%, and Apple’s overall revenue by 0.07%. This headwind would lower the Services growth rate in 2020 from 15% to 14%.”

Much more in the full article here.

MacDailyNews Take: As Gene points out in his full article, Google Play is most at risk of being cut out of subscription revenue, not Apple’s App Store.

10 Comments

      1. Seems Gene has a different understanding since he notes in his article Apple only loses out on the initial subscription on which he bases his ‘minor impact’ calculation.

  1. If you currently subscribe to Netflix, nothing will change. If you will be a new Netflix subscriber with your new Apple TV, then you will now have to give Netflix your Credit card number, rather than just get billed through iTunes.

    1. As long as you don’t let your subscription lapse, nothing will change. If you do you’ll be in the same boat as ‘new’ subscribers and have to give Netflix your Credit number. Netflix keeps your account preferences data for a year just in case you decide to return after a short lapse in subscription for one reason or another.

  2. This is not a new concept for content providers and is hardly news worthy. Amazon and Audible ( now an Amazon company) have always required users/customers/subscribers of movie rentals, music downloads,monthly subscription services to set up and make payment for said content via the company websites. While it is a hassle sometimes to have both a bookmarked website and the app to get the content it is a minor inconvenience. These will be the exception not the rule. Because of scale the big companies can afford to bypass Apples pay wall for service. But the smaller providers will still remain because the small service fee apple charges is minor compared to standing up your own high band width server farms and payment processing carts.

  3. I think it might be harder for Spotify to leave. They would be basically giving Apple more AppleMusic customers. Some will not go through the extra steps and will get hooked by the free 3 month trial

    1. You understand that though the title says ‘leaving’ it does not mean the Netflix App will not be available in the App Store it simply means Netflix has removed all in-App purchase/subscription functions in their App making it simply a ‘media player’ app. Spotify should have no problem following the same path.

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