Apple The ‘Exploiter’ Slam Dunked By Netflix
As Apple struggles in the smartphone market with their iPhones sales falling due in part to over charging for their latest smartphones, a new problem has emerged with Netflix being just one of several Companies that are pulling the plug on a relationship with Apple.
The potential of a new streaming competition from Apple is believed to have triggered Netflix decision’s to bar customers from paying for new video subscriptions through its iPhone app.
Another solution is that Netflix could well start charging Apple customers $3.30 extra for subscribing to their service.
What Netflix is now doing is directing users to its website, thus avoiding the extra fees.
Apple’s iPhone revenue this year is expected to drop by 15 percent from last year $141 billion, according to analysts surveyed by FactSet.
Services, by contrast, is expected to generate about $46 billion in revenue this year, according to the same survey. Apple services and app store revenue will have doubled in just three years claims observers.
Besides the app fees, Apple’s services division includes revenue from its Apple Music streaming service, iCloud storage, Apple Care, Apple Pay and ad commissions that Google pays to be the iPhone’s built-in search engine.
Analysts claim that the Apple app store will account for $16 billion of the services revenue.
But it is not only Apple partners who are upset with Apple over charging attorneys representing consumers in a pending US Supreme Court case claim that Apple is an unfair monopolist in the market for iPhone apps.
An adverse decision in that case could open a legal door that might eventually force Apple to cut its generous commissions.
Late last year, Netflix rebelled against Apple’s fees, which can range from 15 percent to 30 percent and now want to pass on the charges.
Analysts are tipping that other companies may follow and look for other ways to generate revenue.
Spotify, for instance, used to tack $3 onto the cost of its $10-a-month paid service – but only for users who signed up via its iPhone or iPad app.
This year Apples shares have fallen by 25 percent with the Company set to hold a press event on the 25th of March to spruik their services division and a new content offering which they currently claim will be its new profit engine.
That plan could hit a snag if the app store takes a hit, since it currently generates about a third of the company’s services revenue.
Macquarie Securities analyst Benjamin Schachter claims investors are now hanging onto Apple services as a ‘life preserver in the choppy seas’ just as it’s about to float away.
The decision by Netflix to cut Apple out of their marketing has drawn attention to what is now being described as the Apple app store tax that other technology companies have already attacked as an abuse of the power that Apple has amassed since opening its app store years ago.
Almost three years ago, Spotify also stopped accepting new subscriptions through Apple’s app store. Its move followed the debut of Apple Music, which obviously doesn’t have to pay any commissions.
‘They’re trying to have their cake and eat ours, too,’ Spotify spokesman Jonathan Prince told The Associated Press.
Apple has responded by demanding an even higher commission – roughly 50 percent – for a Netflix-like news service that it is trying to create with a variety of publishers, according to a recent Wall Street Journal report.
That proposal faces resistance from The New York Times, The Washington Post and other publishers who believe Apple is trying to exploit its market power to extract excessive fees.