Netflix is curbing a $256 million revenue stream for Apple by circumventing iTunes billing

Hector Vivas/Latin Content/Getty ImagesReed Hastings, the CEO of Netflix.

  • Netflix has stopped allowing users of Apple devices to join or rejoin the streaming service via iTunes.
  • Instead, new or lapsed users will be asked to pay on Netflix’s website.
  • This allows Netflix to avoid paying Apple’s levies on new in-app subscriptions. Apple reportedly earned as much as $US256 million in revenue last year from the Netflix app.

Netflix has stopped allowing those with iPads or iPhones to join the streaming service through iTunes, a move sure to deprive Apple of millions of dollars in annual revenue over time.

The change means iOS users who are joining Netflix or reopening an account will pay through Netflix’s website rather than through Apple’s service.

Netflix confirmed to VentureBeat that it had pulled the plug on in-app payment, with a spokesman saying, “We no longer support iTunes as a method of payment for new members.”

Read more:
Apple and Google’s app-store businesses are coming under pressure – and the companies could end up losing billions of dollars

The company has also updated the FAQ on its website with the following statement: “iTunes billing for Netflix is not available to new or rejoining Netflix customers. If you are currently billed by iTunes, you can continue to use iTunes billing until your account is cancelled.”

The change allows Netflix to avoid paying the 15% levy that Apple charges on in-app subscriptions and keep all subscription revenue for itself. Netflix was already testing a way to bypass iTunes payments in 33 countries, and it will now be rolling that out globally.

It will be a costly change for Apple.

According to SensorTower, Netflix is the top-grossing app in the US for Apple, bringing in $US43 million in November alone. And according to new data cited by TechCrunch, the streaming service handed as much as $US256 million in 2018 to Apple.

Netflix isn’t the first developer to buck against the steep fees charged by Apple and the Android maker Google on in-app purchases. Both take a 30% cut of paid apps, in-app purchases, and subscriptions. That drops to 15% in the second year of a subscription.

Amazon has long had a clunky workaround that means anyone using the Kindle app on the iPhone or iPad can’t actually buy books directly through the app.

Epic Games, the creator of “Fortnite,” has also chosen not to offer the hit game through Google’s app store, Google Play, citing the “store tax.” Instead, Android owners have to head to the “Fortnite” website to download the Android app via a dedicated installer.

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.