Apple NASDAQ AAPL got a lump of coal in its stocking this holiday season courtesy of Netflix NASDAQ NFLX In-app subscriptions to the streaming video service have been a significant contributor to Apple Services revenue thanks to the chunk of every payment that goes to Apple when someone subscribes through an iOS app However a few days after Christmas Netflix confirmed that it no longer allows sign-up and payment through the iOS app requiring users to instead use its website Thats a lot less convenient for new Netflix users but more importantly from AAPLs perspective the move eliminates its cut from the most lucrative app on the App Store Through the summer Netflix fired a warning shot at AAPL The company updated its iOS app preventing users in some countries from paying for a new subscription through its iOS app Instead they were directed to the Netflix website By August the experiment had expanded to 33 countries although the US was not affected In September the in-app payment option was restored Not for long however On Dec 28 Netflix confirmed that it has now rolled out that change globally telling Venturebeat We no longer support iTunes as a method of payment for new members A Netflix representative confirmed that existing iOS customers can continue to pay their subscription through their iTunes account so Apple Services revenue from the app isnt eliminated altogether If someone lets their subscription lapse for a month they wont be able to re-activate and pay via the iOS app theyll also be forced to set up payment through the Netflix website Inconvenient for Customers In-app subscriptions are more convenient for most customers This option means one less billing outlet to keep track of since their Netflix subscription piggybacks on an existing iTunes account Theres also no additional cost for customers In fact paying through iTunes has had the added benefit for some of effectively cutting their Netflix monthly rate because they are able to load up their iTunes account with Apple gift cards which are often discounted as much as 20 at retailers Having to sign up and enter billing info through the Netflix website is a minor inconvenience but clearly Netflix saw little pushback during its summer experiment The company also forces new Android users to pay through its website A Blow to Apple Services Revenue Why would Netflix want to make the initial sign-up process a little more difficult for new iOS subscribers APPL is coming out with its own streaming video service in 2019 so this could be a swat to let AAPL know that Netflix now sees it as a competitor Without a doubt the primary reason is money For every subscription initiated through an iOS app Apple takes a 30 cut for the first year and 15 after that While this is great for Apple Services revenue app publishers have begun to chafe against this model we spiked this out as a risk to App Store revenue just two weeks ago In particular Netflix was a potential problem Its app was identified as the highest grossing of 2018 on the App Store pulling in nearly 800 million as of the end of November Netflix was losing either 30 or 15 depending on the length the subscription had been in place of every dollar to Apple and at a time when NFLX is increasingly under pressure to boost revenue as new subscribers become more difficult to sign up That pressure already led the company to boost rates in Canada last month Bypassing AAPL is a way to collect more cash without causing grumbling from customers over higher rates So the move to prevent new customers from paying for their Netflix subscription from within their iOS app isnt really a surprise But the move is a blow to Apple Services revenue And its not great news for AAPL investors who have been looking to Services to take the load off iPhone revenue in a softening smartphone market When the highest grossing app decides to bypass in-app payment that sets the stage for others to follow As of this writing Brad Moon did not hold a position in any of the aforementioned securitie s More From InvestorPlace The post Netflix Pulls the Plug on New In-App iOS Subscriptions appeared first on InvestorPlace