At the moment, if you sign up for Netflix through the iOS app, Apple gets a 30 percent cut of the money. This is how Apple was able to make $11.5 billion in revenue from the App Store in 2017. However, Netflix is now saying enough is enough.
Understandably, Netflix would like to avoid handing over 30 percent of your subscription to Apple. Which is why the streaming service is testing a way of avoiding paying the Apple tax. Which essentially means forcing users to sign up on the web instead.
Redirecting Users to the Netflix Homepage
According to multiple reports, in a months-long test, some users have been directed away from signing up for Netflix through an in-app iOS purchase. Instead, they’re being redirected to the Netflix homepage on their web browser of choice.
This simple maneuver helps Netflix avoid giving away up to 30 percent of its subscription fees to Apple. By merely directing people to sign up on the web Netflix gets to keep all of the cash for itself. Which it will undoubtedly spend making more Netflix Originals.
Netflix looking to bypass the Apple Store 30% is not surprising, Amazon has done a good job at this, but it brings up an interesting debate about the value of a marketplace and what is fair as a cut for the marketplace provider.
Physical retail cut is 40-50% generally..
— Ben Bajarin (@BenBajarin) August 21, 2018
Netflix has confirmed it has been testing cutting Apple out of the equation. A customer support agent reportedly told TechCrunch that the test has been running since June, and is now live in 33 countries. However, the test is set to end on September 30.
Netflix issued a statement saying, “We are constantly innovating and testing new signup approaches on different platforms to better understand what our members like. Based on what we learn, we work to improve the Netflix experience for members everywhere.”
Can Netflix Cut Apple Out of the Loop?
The key for Netflix will be figuring out whether the extra cash it gets to keep makes up for any potential loss in revenue caused by the extra step in the sign-up process. Cutting Apple out of the loop for good will be a gamble, even for a company as big as Netflix.
Apple isn’t the only company which takes a cut of in-app purchases. Which is why Fortnite for Android isn’t available through Google Play. Whatever happens, we know the gatekeepers will be fine, as Apple recently become the first $1 trillion company.