Last week, Google’s YouTube notified YouTube TV customers they won’t be able to pay for their subscriptions via the App Store anymore, starting in March, reports Mac Rumors. Subscribers will have to find another way to pay for their subscriptions, or their subscriptions will be canceled altogether. Customers will be billed one final time through the App Store’s in-app purchases, and then subscriptions will be canceled automatically either on their billing date or after March 13, 2020.
While YouTube did not specify the reason for the change, it is likely the so-called “Apple tax,” which caused YouTube to increase its monthly prices for in-app purchases from the standard $49.99 to $54.99, is the culprit. YouTube made a similar change to YouTube TV App Store in-app purchases on iPhones and iPads several months ago, says Apple Insider.
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Apple takes a 30% cut of subscriptions for the first year, and 15% of subsequent years. Of a $54.99 YouTube TV subscription, Apple would receive $16.50 per month in the first year, and $8.25 per month in subsequent years. When customers pay directly through YouTube TV, YouTube keeps 100% of the subscription fee.
According to Mac Rumors, the email notifications told YouTube TV customers the following:
“You’re currently subscribed to YouTube TV through Apple in-app purchases, so we’re writing to let you know that, starting March 13, 2020, YouTube TV will no longer accept payment through Apple in-app purchases. YouTube TV members will still be able to watch YouTube TV content on Apple devices.”
Launched in 2017, YouTube TV is a streaming video alternative, offering live TV from 70+ channels and local sports and news. It includes the major networks, Fox, ESPN, AMC, CNN, Disney, Food Network, HGTV, TNT and others. In addition, YouTube TV subscribers can record shows with unlimited storage space, share their account with up to six members of their family, watch three streams simultaneously, and cancel at their discretion. The streaming service is available on a variety of devices, including smart TVs (Android TV, Samsung, LG, Vizio, Sharp, etc.), Google Chromecast, Roku, Apple TV, Fire TV, Xbox One and PlayStation gaming consoles, smartphones and tablets.
In 2019, YouTube subscriptions (YouTube, YouTube Music and YouTube TV) generated $3 billion in revenue for Alphabet. The company’s three premium subscription services had a combined total of 20 million subscribers last year, including 2 million YouTube TV subscribers. The fourth quarter and 2019 year end financials report was the first time that Alphabet, better known as Google, broke revenue out separately for YouTube, including advertising and subscription revenue.
The Street reports, via The Information, that Alphabet is considering turning YouTube TV into a streaming destination, similar to Amazon Prime Channels which has a menu of other streaming services that viewers can subscribe to. Think of it as one-stop shopping for streaming. YouTube TV currently offers premium add-ons like Showtime, says The Street, which may be one step in the streaming destination strategy.
The Apple tax has long been a thorn in the side of app developers and streaming platforms. Afterall, a 30% cut of subscription fees and in-app purchases is pretty significant. In fact, that’s likely why Apple changed its policy from 30% per year to 30% for the first year and 15% for subsequent years. It is still a pretty penny to pay, and companies like Netflix and Spotify have already pulled their subscription services from the App Store in protest. Now that YouTube is pulling out of the App Store too, could this be the beginning of a 2020 trend?