Netflix stops paying tax for "Apple App Store"

Netflix has tested a bypass of iTunes billing system across a number of markets worldwide. In 2018 Netflix has ditched the ability for new users to sign up and subscribe to the streaming service through its iOS app across all global markets. The change means Apple will miss out on hundreds of millions in App Store revenue per year and the money it would have otherwise received by way of its standard cut of in-app transactions.

With reference to the report published by Sensor Tower, Netflix grossed $853 million in 2018 on the iOS App Retailer. Primarily based on that, Apple’s take would have been round $256 million, the agency mentioned.

Thus far, the Netflix iOS app has generated greater than $1.5 billion by its in-app subscriptions, with Apple’s minimize coming in round $450 million-plus, Sensor Tower estimated.

Earlier, Netflix on iOS was grossing a median of $2.four million per day in 2018 — which means Apple was making round $700,000 by doing nothing aside from permitting Netflix to supply subscriptions in its app.

Netflix’s iOS income has been climbing steadily through the years.

In 2017, its gross subscriber income was $510 million, up from $215 million customers spent within the app in 2016, which earned it the No. 1 spot on the Prime Grossing Chart for non-game apps. It snagged that place once more in these 12 months, trailed by Tinder and Tencent Video.

The streaming service’s decision to bypass the App Store isn’t a first. Many companies today direct their users to the web or other platforms in order to avoid marketplace fees.

For example, Amazon has historically restricted movie and TV rentals and purchases to its own website or other “compatible” apps, instead of allowing them to take place through its Prime Video app. The same goes for Kindle e-books, which also aren’t offered in the Kindle mobile app. Spotify also discontinued the option to pay for its Premium service using Apple’s in-app payment system.

Epic Games this year bypassed Google’s Play Store altogether — as well as its 30 percent cut, when it launched Fortnite for Android as a sideloaded app. That decision resulted in Google’s loss of $50 million+ in marketplaces fees.

Netflix earlier this year had dropped in-app subscription sign-ups in its Android app on Google Play. That signaled its intentions to later take back the so-called “Apple tax” for itself, too.

However, Netflix still earns money on Google Play through existing subscribers. That totaled around $105 million in 2018, with Google earning close to $32 million of that. But the number has been declining consistently, Sensor Tower said. Apple could soon be in the same boat.