Loup Ventures: Apple Services Model Is Sound Despite Netflix Exit

The news that new Netflix customers will no longer be able to sign up through Apple’s App Store will only result in a fractional earnings hit for Apple Inc. AAPL, and doesn’t change the notion that Apple is shifting to a service business, according to Loup Ventures, the venture capital firm that closely watches Cupertino. 

Netflix confirmed late last week that it won’t allow new customers to pay for the streaming service through the app. It's an effort to get around the “Apple tax,” the 30-percent cut Apple takes from handling subscription payments through the app in the first year.

Low Risk Of Further App Store 'Defections'

Netflix, Inc. NFLX announced during the summer it was trying out having new subscribers go to a webpage to set up payment, so the move wasn’t a huge surprise, Loup’s Gene Munster said in a Monday note. 

“The move is a fractional negative to (Apple) earnings, along with a psychological headwind to investors embracing the theme of Apple as a service,” he said. 

The only other brand likely strong enough to try to require new users to sign up without using the App Store is Spotify, meaning “the Apple as a service theme is intact," Munster said. 

“We think the risk of further defections is low,” he said. “The value of the App Store for developers is app discovery and conversion. Loss of new subscribers due to additional sign-up friction will force most apps to continue offering subscriptions through the App Store.”

Price Action

Apple was trading up 1.38 percent at $158.36 at the time of publication Monday. Netflix was up 5.11 percent at $269.16.

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Photo courtesy of Netflix.