Netflix is joining the likes of Epic Games Inc. and Spotify Technology SA SPOT, +0.06% in its latest move: testing a way for users to register and pay for the streaming service while bypassing Apple Inc.’s AAPL, +0.65% app store and hefty commission fees.
The streaming giant is the latest company to look into bypassing Apple's app store and Alphabet Inc.’s GOOG, +0.34% Google Play. Both Apple and Google take a 30% commission on all apps and in-app purchases, and the commission drops to 15% after the first year.
Netflix NFLX, -1.30% is looking into a new sign-up approach where users in some countries are no longer able to register for streaming service. They are being redirected to the mobile web version of the app and asked to enter payment details with Netflix directly. The test is running in 33 countries, not including the U.S., through the month of September, according to TechCrunch. This comes just months after Netflix in May made billing through Google Pay unavailable to new customers, though current subscribers that pay via Google Play can continue to do so until they cancel their accounts.
Companies have long complained about the heavy cut Apple and Google take in return for visibility on their platforms. Spotify does not allow new subscribers to sign up via Apple’s app store, though the app itself can still be downloaded there. The company has been especially vocal about the fees over the years, publicly speaking out and approaching U.S. and European regulators about the issue. In 2015, Spotify sent emails to its iPhone customers, urging them to pay through Spotify.com rather than through Apple’s store. “If you switch your payments to Spotify.com, there are no transaction costs and you’ll save money,” said the emails, which included step-by-step instructions on how to shut off auto-renew in iTunes and how to re-subscribe on the Spotify website. The emails said the monthly fees through Spotify.com would be $9.99 versus $12.99 through the app store.
And e-commerce giant Amazon.com Inc. AMZN, +0.33% does not give Apple a cut of Kindle books purchased; for years, users have had to buy them through the Amazon website, not through the Kindle app.
Video game makers are pushing back, as well.
“We’ve had behind-closed-door discussions with game developers who claim that Apple and Google’s commission structure is unfair and that they may take a more public role in pushing back against the business model,” wrote Macquarie analysts, led by Ben Schachter, in a note last week.
Epic Games will be launching its hit game Fortnite for Android on its own website, and fans will only be able to download the game there, not on Google Play. Fortnite is available on Apple’s app store; Apple does not allow any third-party apps to be installed on its devices, while the setting that blocks third-party installations can be disabled on Android phones.
The pushback from companies may mean the longstanding app distribution model, as dictated by Apple and Google, needs to change, said Schachter in his note.
“We believe that the scale of the global app market and its growing importance to the platforms and the millions of app developers and publishers may lead to changes to the model,” he wrote.
Netflix shares have shot up 77% so far this year, while shares of Apple have surged up 27% and shares of Alphabet have gained 16%. The S&P 500 SPX, -0.09% has gained 7%, while the tech-heavy Nasdaq COMP, +0.08% has gained 14%.