The Epic Vs. Apple’s battle is a revelation in some sense. Last year we learned how Apple stuck a deal with Amazon and reduced App Store fees for Amazon Prime Videos. A newly leaked internal email thread details how Apple struggled to convince Netflix not to ditch in-app Payment system.

In 2018 Netflix stopped allowing new users to signup via App Store on the iPhone. In other words, Netflix redirected new users to the website, wherein they could subscribe. The email shows that Apple tried hard to convince Netflix not to drop in-app purchase support. Moreover, Apple was quite alarmed when it came to know about Netflix’s A/B testing with App Stores In-App purchase system.

Outside of the voluntary churn issue, Netflix is concerned with understanding the incremental value of offering subscription via IAP on iOS. To measure this, they proposed a test that would remove the ability to purchase the subscription via in-app purchase in a select number of markets for a two-month period (see list of markets below). They would like to run the test in May and June, and estimate this test would impact 1.9% of annual in-app signups. We expressed our concern that running this test would create a bad customer experience for app users in those markets and limit co-marketing opportunities, including on-store featuring.

The email thread was marked to a series of high-level Apple executives. This included Matt Fischer, Pete Distad, Carson Oliver, Peter Stern, and others. The voluntary churn issue points towards many Netflix subscribers who cancel subscriptions after signing up on the App Store. Apple told Netflix that users might be switching to the website to use Netflix gift cards. However, Netflix responded negatively and said it was not the case.

Apple also mulled taking “punitive measures” against Netflix, and this included withdrawing “global featuring during the test period.” The executives then arranged a slew of meetings with Netflix to talk about its plan to remove IAP.

Apple Tried to Convince Netflix

The company had created a presentation deck detailing the benefits of the App Store for Netflix. It included multiple ways in which Netflix could implement IAP and reap the benefits of App Store distribution.

• More features than any other partner (35+ stories worldwide)
• Featuring yielded a 6-7% increase in download conversion rate
• 16.5M readers worldwide to date, estimated 330K downloads

Further in the presentation, Apple also talked about “premium subscription video entertainment providers.” The company also mentioned a bundle offer with Netflix and Apple Service. As we all know, Apple couldn’t convince Netflix, and the latter dropped support for IAP in December 2018. The emails establish that Apple was not ready to lose Netflix as it was one of its biggest clients. Till date, Netflix doesnt offer in-app purchases, and you are required to subscribe using its website.