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This could be bad news for Apple…
Netflix has proven something in its nearly two decade-history: it’s a game-changing innovator who’s constantly experimenting in order to stay relevant and profitable.
From its start taking on the age-old video rental store concept as a DVD-by-mail subscription all the way through its evolution to a content producing studio, the company has managed to not only keep up with consumer interest and behavior, but actually influence it while keeping shareholders very, very happy.
Now, the media giant has launched a new experiment, one that is sure to have major repercussions with other big names in tech. In order to list its mobile device app in Apple’s App Store and the Google Play store, Netflix pays a fee, just like any other app developer. Instead of billing for that fee upfront, the store platforms take a percentage of in-app purchases, as much as a hefty 30% for the first year, and 15% for each year after that.
So what does this mean?
Every person who downloads the Netflix app and subscribes to the service is actually handing a part of that money to Apple or Google, something that Netflix is trying to work around. Their solution? The app no longer lets you subscribe; instead, it forces open your device’s browser and you complete the process there. It might seem pretty seamless to the user, but to Apple, it’s a huge chunk of revenue that just walked away.
Netflix launched this experiment back in June, and it’s expected to run through the end of next month, according to reports. Of course, the company hasn’t tried it in the US market, but has reportedly put it in place in as many as 33 countries.
According to a representative from Netflix, this has nothing to do with the fees that Apple and Google charge, but rather attempting to improve the “customer experience.” Subscribers who pay through the Google Play store have already been told they will discontinue paying on that platform and move to the Netflix site, while only subscribers in the test markets have so far received that notification for Apple payment options.
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