No surprise here, but Netflix confirmed last night that it will not participate in Apple’s coming video service.
“We want to have people watch our content on our service,” Netflix CEO Reed said at a widely-reported press conference. “We’ve chosen not to integrate into their service.”
Spotify has gotten a lot of press this past week for its antitrust allegations against Apple. But Netflix came first: The streaming-video giant announced in November that it would no longer pay Apple’s 30 percent vig on in-app purchases because it was siphoning an unfair $850 million per year from its revenues. Netflix’s complaint mirrors Spotify’s, though the latter had the guts to contact antitrust regulators: Apple unfairly punishes services that compete with its own services by taxing all in-app revenues, including ongoing subscription revenues.
Of course, Netflix relies in part on Apple for distributing its apps. Netflix is quite popular on iPhones and iPads, and Apple TV is one of three or four major ways in which its users enjoy Netflix’s content in the living room. So it has to tread carefully here as Apple moves from partner to a direct competitor.
“Apple’s a great company,” Mr. Hasting said, politically. But he noted that Netflix would have “great difficulty” competing against a company as “well-funded” as Apple. “But you do your best job when you have great competitors,” he added.
Netflix does have a few advantages over Apple, of course. The firm has been buying and producing high-quality content for years, and it now has a deep and rich library of content that even previous market leaders like HBO can’t match. The firm now spends over $10 billion per year acquiring and creating content, an amount that is ten times that which Apple pledged. It also spends an additional $1.2 billion per year on “technology.”
Still, it’s Apple. A firm with the most loyal customer base in tech, and one that has shown itself eager to eat up almost any service, no matter how thin or noncompetitive. That said, recent reports suggest that Apple is moving quickly to create its own content, and given its close ties to Hollywood, there are some big names onboard.
“[Apple] are going to do some great shows,” Hastings said. “I’m going to be envious. They’re going to come up with some great ideas. We’re going to want to borrow those.”