Netflix Is Now on Apple’s iPhone
Why Has Netflix's Stock Price Risen by 21% in the Last Month?
Netflix’s relationship with Apple
Netflix (NFLX) is now available to Apple (AAPL) iPhone users through iOS in-app purchase. The service was not available on Apple’s iPhone earlier but has historically been available on Apple TV. Usually, subscription services such as Netflix, Time Warner’s (TWX) HBO NOW, and Hulu pay 30% fees to Apple if a user subscribes to a service using an Apple device.
Although Apple’s App Store business is a fast-growing one, the company wants even faster growth. According to a report from AppFigures, and as the chart above shows, Alphabet (GOOG) had about 1.4 million apps in its app store in 2014 compared to about 1.2 million apps on Apple’s platform.
Why is Netflix on iPhone?
Netflix stated in its 3Q15 earnings call that it considers its presence on the iPhone to be significant. This is because as Netflix rapidly expands internationally, it’s looking to Apple’s wide iPhone user base to subscribe to its app.
However, if streaming subscriptions do increase for Netflix, the rise in revenue would show up under gross revenue in its financials, while Apple’s fee would be a part of COGS (cost of goods sold). This means that a rise in revenues through Netflix subscriptions on the iPhone would also result in a rise in COGS in the form of the fees paid to Apple.
Netflix makes up 5.6% of the First Trust Dow Jones Internet ETF (FDN).
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