Earlier this week, TechCrunch reported that Netflix is removing the option to pay for a subscription through iTunes in 33 countries as part of a limited-time test. Apple collects a 30% cut whenever anyone signs up for Netflix with iTunes, and then 15% for every subsequent year. By eliminating the option to pay within the app altogether, Netflix increases its profit margin significantly without seriously inconveniencing its users.
It seems inevitable that this test will eventually turn into a permanent change (especially considering Netflix already took away in-app payments on Android earlier this year). But with over 130 million users, what use does Netflix have for what amounts to an incredibly expensive and pointless partnership with Apple anyway?
There are a wide variety of reasons to grin and bear it when it comes to Apple’s cut of sales on the App Store. Some apps don’t have built-in user bases, and no one would pay for the service if it wasn’t a single click away. Netflix is one of the most popular subscription services of any kind on the planet — not only is the number of users who will refuse to sign up because they can’t do so through the app negligible, but there are plenty of other ways to sign up.
Another reason to put up with Apple’s 30% cut is because it disrupts the experience of using the app. If you’ve ever used Amazon’s Kindle app on an iPhone or iPad, you know how frustrating it can be to jump back and forth between the web and the app in order to purchase a new book. As often as an app like that necessitates the user complete a transaction, Amazon’s decision to deny Apple its cut affects the way the app works.
Netflix, on the other hand, only asks you to sign up once. As soon as your credit card information is on file and you’ve chosen a plan, you won’t ever have to worry about navigating to your browser again (unless you want to change your plan or cancel your subscription). It’s one extra step one time, and Netflix could end up saving millions.
Finally, it’s worth noting (as TechCrunch did) that, sooner or later, Apple is going to launch its own streaming service. Why should Netflix help fund the competition? It may add a degree of difficulty to the sign-up process, but it’s hard to blame Netflix, one of the most popular apps on the App Store, for ditching Apple.