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Home / Technology / Chart: How much Apple will lose by billing iTunes for iTunes

Chart: How much Apple will lose by billing iTunes for iTunes



Apple had a hard time during the Christmas season.

In late December, VentureBeat announced that Netflix will force new and expired iOS users to pay for the streaming service through their website, not through iTunes.

And on Wednesday, Apple issued a shock sales warning after iPhone sales and China's economy slowed down than expected.

The development of Netflix does not seem to be a big deal, except that Apple earns a lot of money through the streaming service thanks to its 30% royalty on subscriptions, in-app content, and one-time payments for everything else Store sold.

Read More : Apple's friendly chat about the $ 1

0.8 billion service business has been completely undermined by Netflix

If you pay apps for apps through Apple, the developer must a piece of this revenue will be provided to Apple. This is true for companies with digital content such as mobile games and music and streaming services, and not for apps like Uber or Airbnb that offer real services.

Netflix is ​​very popular, with more revenue in the App Store than any other app in the US, according to SensorTower November data. We can assume that this is also the most successful third-party app for Apple. Additional figures suggest that Apple may lose $ 256 million in potential annual revenue as Netflix skips iTunes billing. Apple loses a large part of the cash from the App Store.

That's how it might look like.

Nomura analysts noted that there is a precedent for Netflix: Spotify has been asking subscribers to pay from Apple for years. The analysts assembled a graph created with data from SensorTower and Instinet and shows how this affects App Store revenue.

This graph shows that Apple will experience a much larger decline of Netflix than Spotify:

The App Store Revenue from Spotify crashed in 2016 The music company urged users to subscribe directly and not via Apple.
Nomura / Business Insider

This is not particularly good news for Apple, which is currently trying to convince investors that their service business can offset the declining iPhone revenue. Apple counts the revenue from the App Store as part of its service business. It also includes the money it earns with iCloud, AppleCare and Apple Music.

Business Insider estimates that App Store revenue accounts for nearly 40% of Apple's service business. You can see how we did it here. Netflix may not hinder this number on its own, but it could set a trend for other big subscription and content companies – like big news agencies or Tinder – who also try to bypass the iTunes billing process.


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