“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.