As expected, Epic Games’ lawsuit against Apple continues to generate data of public interest. Now, an email exchange between Netflix and Apple executives shows how they tried to convince them not to leave the IAP system of the App Store. Something that also ended up happening at the end of 2018.
A negotiation that did not succeed
Since 9to5Mac, they’ve reviewed two new documents related to the Epic and Apple trial. In them an email exchange is linked between the leaders of the two companies, where Netflix expresses its intention to carry out a test. It starts off as follows, with an email from Carson Oliver, Director of Business Administration on the App Store:
Regardless of the issue of voluntary terminations, Netflix is concerned about the incremental value of its subscription offering through IAP on iOS. To measure this, they came up with a test in which they would eliminate the ability to purchase the subscription through in-app purchase in a series of markets over a two-month period.
The editorial section of the App Store where different apps and games are featured every day.
Oliver says in the email that Apple was concerned about giving its users a bad experience in these markets, as well as joint marketing limitation that the action would involve. The exchange and negotiation continues on several occasions, including meetings between the two companies that have gone nowhere.
Apple’s proposals to keep Netflix in the App Store are pretty succulent. They integrate the appearance of “posts” in the editorial section of the App Store to increase conversion, featured as a featured app on iOS and Apple TV, choose the series to highlight, different bundles and further. The video partner program, in force since 2016, is also mentioned, in which the applications of Diffusion Those who join pay a 15% commission instead of the usual 30%, in exchange for a series of integrations with Apple’s platforms.
Netflix did not give in and ended up closing new user registrations since its application, leaving the IAP in December 2018. From then on, a user had to go to their website to activate the service.
The “excess” transparency of the IAP system for the user
There is one detail of interest in this whole affair which makes a fleeting appearance. This is “the problem of voluntary layoffs” that Oliver mentions in his e-mail and of which he gives no further explanation. But we can deduce what is due. And it is that the subscriptions through the App Store are centralized in the same system setting.
So that the user, instead of having to go to each app or website to find out the status of their subscription, simply go to Settings> iCloud> Subscriptions. There are all those who are active, the plans chosen and the possibility to unsubscribe immediately. Apparently, the IAP itself was already at a disadvantage for Netflix as it generated a high rate of voluntary layoffs for the company.
Netflix came to the conclusion that the App Store did not meet its interests, so it proceeded to eliminate the recording system through IAP.
In addition, subscriptions registered through the app itself had to pay a commission of 30% in the first year, 15% in subsequent years. A percentage that Netflix was not ready to give up and that, judging by the negotiations, he did not see that he was compensated in exchange for the marketing actions offered by Apple. Therefore, I have decided to close the IAP for future subscriptions.
The number of Netflix accounts that went to the App Store at this time is unknown. But they would not be few. If we add to the commission the high rate of voluntary dismissals as well as the great strength of the Netflix brandIt’s no wonder Reed Hastings decided to try his luck outside of the App Store.
