Apple's (AAPL 0.01%) new Vision Pro headset is about to go on sale, hitting shelves on Feb. 2, with pre-orders starting on Jan. 19. The "spatial computing device," as Apple has dubbed it, will retail for $3,500, and it represents the company's boldest product launch under CEO Tim Cook.
The Vision Pro could set the standard as the next computing platform, or it could be a flop. Sales of the Meta Quest mixed-reality headset from rival Meta Platforms have thus far been tepid, but Apple seems better positioned to break through in 3D hardware.
The iPhone maker has more of a pedigree in computing hardware than any other company, and owners of Macs, iPhones, and iPads are likely to favor an Apple headset over one from a competitor.
However, before the product even launches, Apple is being dealt a setback from a longtime "frenemy." Netflix (NFLX +0.94%), the world's leading streaming service, has confirmed that it won't offer a native app for the Vision Pro headset.
It isn't even taking the more modest step of supporting its iPad app for the Vision Pro. In a statement reported by Bloomberg, Netflix said, "Our members will be able to enjoy Netflix on the web browser on the Vision Pro, similar to how our members can enjoy Netflix on Macs."
An Apple Vision Pro user. Image source: Apple.
Netflix isn't buying
Netflix's decision to effectively opt out of the Vision Pro constitutes a significant snub for the new technology. Apple devices like the iPhone and iPad have become so successful in part because of the ecosystem of apps that developers design for the devices, and those apps also create significant barriers to entry.
It's a major reason mobile software is essentially a duopoly dominated by Apple and Alphabet's Android. Entertainment apps like Netflix play a major role in the appeal of those devices and could make up an even bigger part of the value proposition for the Vision Pro.
Netflix is currently No. 4 on the iPhone for the most-downloaded free entertainment apps, showing that even with a huge base of users, Netflix is still seeing new sign-ups, or users are adding it to new phones.
It's not fully clear why Netflix isn't participating in the Vision Pro. Disney, on the other hand, was one of Apple's launch partners for the device, and it will offer a native streaming app for the Vision Pro.
Most major streamers are designing a native app or porting their iPad app over to the Vision Pro. Notably, Netflix does have an app for the Meta Quest, but it hasn't updated it in years. That could be a sign that it hasn't seen much adoption for the app on that VR headset.
However, there's another explanation that could be more foreboding for the Vision Pro. Netflix, like many app-based entertainment companies, has fought against the "Apple tax" -- the 30% commission Apple typically takes for spending within apps on its devices -- for years.
That commission was significant enough that Netflix no longer allows prospective subscribers to sign up for its service within the app, making them go to the web browser instead, where Apple doesn't take a cut.
Notably, Netflix no longer supports Apple's Airplay feature, and it doesn't integrate with Apple TV, a sign Netflix doesn't want to assist the iPhone maker, which also offers a competing streaming service.
Apple has fought several cases in court, aiming to protect its ability to collect 30% on in-app payments even if they're from subscription services that could be perpetual, but Apple could also be losing its grip on that cash cow. The Supreme Court just declined to hear Apple's appeal in its dispute with Epic Games, which means that app makers can direct customers to the web for payments.
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What Netflix's decision means for Apple
Netflix's decision to not support the Vision Pro isn't likely to be material in and of itself, but it might convince other app makers to follow suit, potentially changing the Apple tax or extracting better terms for those who won't play ball.
For Apple, the Vision Pro is in a much different position than established devices like the iPhone or iPad, and winning buy-in from most app companies is crucial to its success, which it seems to have done so far. But the company is also interested in protecting its 30% commission, and Netflix's resistance to it and the Vision Pro, as well as the recent court decision, could make that more difficult.
Investors should be paying attention to this storyline. If other popular apps join Netflix in essentially boycotting the Vision Pro, that could put downward pressure on Apple stock since its valuation and expectations are already high heading into the Vision Pro launch.
