Wednesday, May 5, 2021

Punitive Measures for Netflix IAP Test

Chance Miller (tweet, MacRumors):

As part of the Epic vs. Apple trial, a detailed new email thread has come to light showcasing internal communication at Apple once the company became aware of Netflix’s plans to roll out an A/B test focused on use of the App Store’s In-App Purchase system.


The “voluntary churn issue” that Oliver refers to is that Netflix has a higher amount of “voluntary churn” among those paying via the App Store.

This is interesting since I’m always reading that App Store subscriptions are more sticky because the payment information is more likely to be up-to-date.

Also in the email, Oliver questioned whether Apple should take any “punitive measures” in response to Netflix’s planned test to remove IAP support in certain markets. “Do we want to take any punitive measures in response to the test (for examples, pulling all global featuring during the test period)?” Oliver wrote. “If so, how should those punitive measures be communicated to Netflix?”


Update (2021-05-06): Ian Carlos Campbell:

Internal emails revealed during the Epic Games v. Apple lawsuit show that employees at Apple were considering giving Netflix special treatment to convince the streaming service to not abandon in-app purchases. In the run up to Netflix removing its subscription offering to avoid Apple’s fees, a presentation circulated within Apple proposed to advertise Netflix in its retail stores, use a portion of its cut of App Store commission fees to pay for search ads, and even bundle Netflix with other Apple services.


What this whole email saga is illustrative of is how Apple’s policies for developers seem to have exceptions.

Nilay Patel:

I think anyone could look at this and fairly wonder why an operating system vendor is mucking around so deeply inside the business of a popular app

Apple here is wondering what else it can do to justify taking a 30 percent cut of Netflix signups on iOS. The only reasons it’s doing that are 1. it knows it’s not doing enough to keep Netflix from removing IAP and 2. it has the threat of Netflix app signups going down to rely on

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The churn has to do with simple Refund Apple is providing. People could ask for refund of Netflix and Apple will provide them without Netflix's input.

I doubt that refunds have a measurable effect. But it could be the fact that Apple sends invoices for subscription payments, reminding some people to cancel, while Netflix simply charges the credit card.

Or maybe it was just a selection bias, because long-term subscribers are less likely to cancel and IAP users might have a different mix of first-time subscribers.

It can’t be payment information, since that wouldn’t be "voluntary" churn, right?

Both can be true.

More people might turn off the iOS subscription if e.g. they know they won't consume it (holidays); or turn it off if they think they don't really need. Because it's easy and just two taps away.

At the same time, you can have more customers staying around longer since there CC info is more likely to be up to date YoY.

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