Netflix Tests Dropping Apple iTunes Billing

Move would circumvent paying Apple 30 percent for each new subscriber

Netflix is testing how to bypass paying Apple a healthy cut of its subscriptions, with the streaming giant preventing customers in dozens of countries from signing up through iTunes billing, TheWrap has confirmed.

“We are constantly innovating and testing new signup approaches on different platforms to better understand what our members like,” a Netflix spokesperson said in a statement. “Based on what we learn, we work to improve the Netflix experience for members everywhere.”

The test — seen in countries such as France, India, and Great Britain — aims to redirect users to sign up directly on Netflix’s site. And there’s millions of reasons for Netflix to try this. Apple grabs a 30 percent cut from Netflix on all first-year subscribers, a figure that drops to 15 percent once customers reach their second year. Considering Netflix is one of the top-ranked apps in the App Store, it would be a major blow to Apple if it lost its share of subscriber revenue. Apple made more than $9.5 billion last quarter from its services division, which includes its cut of App Store subscriptions.

Apple did not respond to TheWrap’s request for comment.

Netflix’s test is running in 33 countries, not including the U.S., up through the end of September, per TechCrunch. Those countries include: Argentina, Australia, Austria, Belgium, Brazil, Canada, Colombia, Croatia, Czech Republic, Denmark, Ecuador, Finland, France, Germany, Great Britain, Hungary, India, Indonesia, Italy, Japan, Korea, Malaysia, Mexico, Norway, Peru, Philippines, Poland, Slovakia, South Africa, Spain, Sweden, Taiwan and Thailand.

Netflix’s experimentation is noteworthy because it makes the streaming giant the latest company to scoff at sharing its subscriber revenue with Apple. These companies are now competitors, after all, with Apple plotting its billion-dollar content push. Spotify, which is battling Apple Music for music streaming supremacy, urged its customers not to sign up through the App Store two years ago. And Amazon has for years avoided paying Apple 30 percent of each book it sells on its Kindle app.

The test, if it doesn’t offset the revenue Netflix loses from giving Apple its cut, could ultimately be abandoned. On the other hand, if it’s successful for Netflix, you can expect other tech companies to toy with ways to circumvent paying Apple.