Netflix could lose 250 million a year if it entered

Netflix could lose $250 million a year if it entered into a lucrative partnership with Google

Epic Games’ lawsuit against Google revealed a surprising fact: in 2017, the search giant offered Netflix a reduced commission of just 10% on payments made within the Android app, giving the media service 90% of the revenue. The standard commission in the Play Store is 30%, the reduced commission is 15%. However, Netflix rejected the offer and now redirects its users to the payment system to pay for the service via a mobile browser, bypassing the Google Play Store.

    Image source: yousafbhutta / Pixabay

Image source: yousafbhutta / Pixabay

Paul Perryman, vice president of business development at Netflix, confirmed in a 2022 video submitted to the court that such an offer was indeed made by Google in September 2017. Netflix previously gave Google 15% of payments made through its Android app, as did some others, such as Tinder. However, with the introduction of the new offer, the company was faced with a choice: accept the reduced tariff or completely abandon payments via the Google Play Store and encourage users to pay via a mobile browser.

Then Google offered Netflix to become a partner in the development of the platform as part of the program Living Room Accelerator Program (LRAP++), according to an internal Netflix document filed in court. The deal envisaged a commission reduction to 10%, provided Netflix agreed to use the Google Play Billing (GPB) payment system in all countries. “Netflix is ​​currently the only company offering this“, the document says.

Netflix chose the second option, which allowed the company to avoid any royalties from Google. The move was driven in part by Netflix’s forecast that the company would lose profits despite its 10% reduced commission. Netflix’s internal documents indicate that at this rate, the company could lose about $250 million over the course of a year on new subscriptions alone, taking into account their increasing numbers.

Netflix’s argument was that Google’s payment system couldn’t outperform or even match the efficiency of the company’s own system. Perryman’s statement was not disputed by Google’s lawyer, who in turn emphasized that the Netflix app is available on virtually all devices that play videos, suggesting that the company is able to bypass the App Store and rely on the Exit browser registration.

Google spokesman Dan Jackson declined to comment on the specifics of the Netflix deal, but said that different pricing for developers is normal for Google, given the different needs of the developer ecosystem and the economics of different industries Consider applications such as video streaming. . He also added that the Play Media Experience program, launched in 2021 after the Epic lawsuit, offers rates where apps that offer videos, music and books can pay as little as 10%.

It’s important to note that while Netflix hasn’t made a deal with Google, it did once make the same deal with Apple. According to an email found in Epic Games’ lawsuit against Apple, Netflix has a special agreement with Apple whereby the company will only share 15% of its iOS revenue, half of Apple’s standard rate.

About the author

Robbie Elmers

Robbie Elmers is a staff writer for Tech News Space, covering software, applications and services.

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