Apple Faces App Store Revenue Meltdown

Apple Faces App Store Revenue Meltdown
Netflix and many developers are reportedly fed up with paying huge commissions to Apple for sales made on the App Store.

(CCM) — A backlash against Apple's App Store charges could see the company's revenues collapse by more than $15 billion annually, according to a Bloomberg report.

Netflix, one of the highest-grossing apps for Apple, is exploring ways to get around Apple's charges by encouraging subscribers to pay by credit card from its web site. Many developers are also believed to be unhappy with what they see as Apple's excessive cut from their sales revenues.

An analyst note from Macquarie Research says that Apple may be forced to reduce the share of sales that it keeps for itself. "We believe that the traditional … commission rates for app distribution may come under pressure," the note said. "Changes in the commission rates would meaningfully impact profits."

Apple currently takes a 30% cut from the sale of apps, in-app purchases, and in-app subscriptions, with the cut falling to 15% for in-app subscriptions only after the first year. At these rates Apple is expected to generate App Store revenues of $20 billion by 2020, accounting for over a quarter of its total projected earnings.

If Apple's App Store commissions fall to a blended rate of 5% to 15%, that would knock up to 21% off Apple’s earnings by 2020, the Macquarie Research note estimated.

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