Netflix’s In-App Purchase Revenue Drops for Nine Straight Quarters to $38.1 Billion in Q2

Netflix’s In-App Purchase Revenue Drops for Nine Straight Quarters to $38.1 Billion in Q2 2024

Although the number of people subscribing to Netflix services has snowballed over the years, surging by more than 500% in a decade to 277 million as of Q2 2024, people are spending less and less money on the streaming giant’s mobile app. According to data presented by Stocklytics.com, Netflix’s in-app purchase revenue has been falling for nine straight quarters, reaching $38.1 billion in Q2.

This fall is from a recent high of $69.8bn in Q2 2022, and an all-time high of $191.2bn in Q4 2018. 

Monthly Revenue Dropped Fivefold Since 2018

Neil Roarty, analyst at Stocklytics commented: “Several key factors drive Netflix’s in-app purchase drop. For a start, the price of Netflix subscription plans has skyrocketed over the years. As of October 2023, when the last price increase occurred, Netflix users paid $11.99 instead for the basic plan, nearly 35% more than ten years ago. The premium account in the US now costs $22.99, practically twice the price users paid back in 2014. These price hikes have reduced subscriptions through In-App Purchase (IAP) channels.”

“Another major reason is Netflix’s push for direct billing, which helps the company avoid paying commission fees to app stores. Additionally, the competition in the on-demand streaming landscape has grown tremendously, with new providers gaining users and increasing their market share. These shifts in payment methods and user behavior are cutting into Netflix’s IAP revenue.”

Statista and AppMagic data shows that the streaming giant’s in-app purchase revenue generated on Google Play and Apple App Store has fallen for nine straight quarters to only $38.1 billion in Q2. This represented a 14% drop compared to the previous quarter and a 17% decrease compared to Q4 2023 figures.

However, a deeper insight and comparison to IAP revenue in 2018, still the record year for Netflix’s app, shows a shocking difference. Statistics show Netflix’s IAP revenue plunged fivefold since Q4 2018, when it hit an all-time high of $191.2 million.

IAP Revenue Drops, but the Number of Subscribers Grows

Despite the substantial drop in its IAP revenue, the number of people subscribing to Netflix services continues rising. In 2014, Netflix added 8.3 million new subscribers, bringing their total number to nearly 55 million. Two years later, the number of new subscribers more than doubled to over 18 million, pushing the total user count to almost 90 million. In 2020, amid the lockdowns, Netflix added 36.5 million new subscribers, the highest number in the platform’s history, reaching over 200 million users that year.

After a significant slowdown in 2021 and 2022, with the streaming giant adding 18.1 million and 8.9 million subscribers, respectively, Netflix subscriber growth gained momentum last year, with the company reporting nearly 30 million new users. The strong momentum continued in 2024, with another 17.3 million users flocking to the streaming platform in the first half of the year and pushing the total user count to 277 million. If this trend continues in the year’s second half, 2024 could become one of the best years for Netflix subscriber growth. Thanks to its ever-growing subscriber base, the streaming giant has grossed over $207 billion in the past decade.

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FAQs

Note: The following questions and answers were not sourced from the original press release but were collated by MadTechMag.com to provide additional insights and context based on the information presented in the article.

1. What factors are contributing to the decline in Netflix’s in-app purchase revenue?

Netflix’s in-app purchase (IAP) revenue decline can be attributed to several key factors:

• Price Increases: Netflix has significantly raised subscription prices over the years, with the basic plan increasing by nearly 35% since a decade ago. Higher subscription costs discourage users from making additional in-app purchases.
• Direct Billing Strategy: The company has shifted towards direct billing methods to avoid paying commission fees to app stores, which has affected revenue generated through IAP channels.
• Increased Competition: The streaming market has become more competitive, with numerous new providers entering the space, which can divert user spending away from Netflix.

2. Despite the drop in in-app purchases, how is Netflix still managing to grow its subscriber base?

Netflix continues to grow its subscriber base due to several factors:

• Content Library: The platform consistently invests in original content, which attracts new subscribers and retains existing ones.
• Market Penetration: Netflix has expanded its offerings and tailored its services to various markets, making it appealing to a broader audience.
• User Experience: Improvements in user experience, including personalized recommendations and user-friendly interfaces, help keep subscribers engaged and satisfied.

3. What does the future look like for Netflix in terms of revenue and subscriber growth?

The future for Netflix appears promising, although it comes with challenges:

• Subscriber Growth Potential: With the platform already adding 17.3 million new users in the first half of 2024, it has the potential for a strong year if this trend continues.
• Revenue Diversification: Netflix is likely to explore new revenue streams, including partnerships and advertising, to compensate for declining IAP revenue.
• Adaptation to Market Trends: If Netflix can successfully navigate the competitive landscape and adapt its pricing and billing strategies, it could maintain its position as a leader in the streaming industry while continuing to grow its subscriber base.