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Netflix Is Now Top of the Apple App Store Food Chain

December 6, 2016, 5:19 PM UTC
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Netflix CEO Reed Hastings delivers a keynote address at CES 2016 at The Venetian Las Vegas on January 6, 2016 in Las Vegas, Nevada. CES, the world's largest annual consumer technology trade show, runs through January 9 and is expected to feature 3,600 exhibitors showing off their latest products and services to more than 150,000 attendees.
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Netflix is proving a free app can make big money on Apple’s App Store.

The video-streaming app, which is free for users to download but requires a subscription to its service, is now the top-grossing iPhone app in Apple’s App Store. The achievement comes about a year after Netflix announced that it would offer in-app purchases in the program, allowing users to sign up for the service or add the ability for multiple users to watch its content on the same account all from within its software. Sensor Tower, a company that offers mobile app services and analytics, says the app is also the top-grossing iPhone app in India, Mexico, and Colombia.

Apple (AAPL) tracks the most popular free and paid programs in its App Store based on their total number of downloads on any given day. The company’s top-grossing chart provides insight into the apps that are generating the most revenue through the marketplace. That revenue is generated through the sale of paid apps or via in-app purchases. In Netflix’s case, the company’s app is available as a free download, but comes with in-app purchases ranging from $8 a month to $12 per month, depending on the number of “screens,” or simultaneous viewers, a user might want.

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Netflix’s success is also Apple’s success: Apple takes a portion of the revenue generated from paid apps and in-app purchases. Apple typically takes 30% of revenue generated from the sale of an app or in-app content, but for subscription-based apps of an auto-renewing subscription, the company takes 70% the first year and 85% in subsequent years. It’s unknown what the revenue-sharing agreement between Apple and Netflix is.

Neither Netflix (NFLX) nor Apple shares how much an individual app generates in revenue through the marketplace, but Sensor Tower’s data suggests it might be significant.

Sensor Tower, which derives its data from anonymous information it collects across millions of smartphones, estimates that Netflix is generating nearly $2.9 million a week in net revenue from its iPhone app. The analytics firm estimates that Netflix’s weekly iPhone app revenue hovered at less than $50,000 in fall 2015, when the in-app purchases were rolling out to users.

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Looking ahead, Netflix might have some work cut out for it to stay atop the top-grossing heap. The chart is always changing and apps are constantly moving up and down the list. Just last month, for instance, Netflix was in the seventh spot for highest-grossing iPhone apps. On Nov. 14, it was in the second spot.

Netflix did not immediately respond to a request for comment.