Netflix is All Set to Bypass Apple’s iOS Tax in 33 Countries

By Tripti Rai
2. min read
Last update on: July 16, 2020

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The business models that Apple has adopted have placed the tech giant in the growth tangent that has already crossed multi-trillion valuations.

While the popularity of the Apple devices plays a very important role in making Apple a trillion dollar company, the 15 percent cut on all the in-app purchases and app subscriptions adds on to the massive yearly revenues that Apple generates.

Although the 15% tax has obviously been working in the favour of Apple and its skyrocketing revenue graph, the cut is now leaving some of the Apple’s biggest revenue generators frowning.

One such high revenue contributor who has now ditched Apple’s iOS 15% tax is Netflix.

Back in August, Netflix was testing a bypass on the iTune billing and now the entertainment industry’s leader has decided to bypass Apple’s tax entirely.

Talking about the move that is speculated to have rolled out in late December, a Netflix spokesperson said that “We no longer support iTunes as a method of payment for new members”.

Netflix further added that while the existing users will have to continue their billing through the iTunes payment method, the new users will have to pay for their membership through the Netflix website. Also, the users who close their subscription and restart after a month will now have to pay through the website and not the iTunes store.

The countries where Netflix has rolled out this changed payment process include – Thailand, Taiwan, Sweden, Spain, South Africa, Slovakia, Poland, Philippines, Peru, Norway, Mexico, Malaysia, Korea, Japan, Italy, Indonesia, India, Hungary, Great Britain, Germany, France, Finland, Ecuador, Denmark, Czech Republic, Croatia, Colombia, Canada, Brazil, Belgium, Austria, Australia, and Argentina.

Let us look at how much netflix, the top grossing iOS app has earned Apple Store till date –

According to Sensor Tower, Netflix has earned over $853 million in 2018 – a figure which places Apple’s cut at $256 Million.

Till date, Netflix iOS app has earned over $1.5 billion via the in-app subscriptions route, making Apple’s cut approximately $450 million.

And if we look at a per day picture, what we will see is that out of the average $2.4 million that Netflix generated on iOS before this move, Apple made over $700k on a per day basis by simply allowing Netflix offer subscriptions.

Has Netflix Strengthened the Revolution That Started with Financial Times?

Netflix is not the first company to have decided to bypass the iOS 15% tax route. Brands like Financial times, Spotify, and Epic Games.

While these brands have taken an action against the high taxes on their app subscription on both Apple and Android Play Store, there are a number of developers and businesses who have been requesting the same from both the stores.

Chances are that seeing how the Netflix case unfolds – will Apple keep the app on the iOS store or not – a number of businesses will now follow the league.

If all goes well, businesses who are looking to enter the stores with subscription based model will get a reason to rejoice. Also, the numeric answer to How much does it cost to develop an app like Netflix, will come down by some points.

What is left to be seen for us for now is A. How will Apple react to the Netflix move and B. Will Netflix expand the changed payment process beyond the 33 countries.

Be hooked to this column to know how it unfolds.

Tripti Rai
Tripti Rai
Content Manager
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