Okay… I know it’s a clickbait title. But you really should understand what is happening behind the scenes. Disney’s acquisition of Fox and Hulu, along with its launch of ESPN+ and Disney+, has forced an industry shift. Cords are being cut faster than ever, and the streaming war is simmering to a boil. With this post, I’m going to show why I believe Apple will buy Netflix.
- Apple Has All The Cash
The most obvious and probable reason Apple will be the parent company of Netflix sooner rather than later is money. Apple has a reportedly enormous amount of cash on hand. Some reports put the number at as much as $245 billion. This amount means Apple could outbid almost every other competitor on the market. Netflix’s long-term debt at the end of the second quarter was over $12 billion, and that number keeps growing. Netflix’s business model has been to create as much content as possible and continue to grow its subscriber base. Unfortunately, Netflix’s subscriber base went backwards for the first time since 2011. The price for Netflix is going the wrong way, so now is the time to sell.
2. Apple TV+ Isn’t The Answer
Apple TV+ is set to launch in about a month for the low low price of $4.99 a month, but what we’ve seen isn’t that impressive. The reports are all over the place about how much Apple is going to spend on original content. The only concrete number we know for sure is $1 billion. Apple has been producing original content since 2016, but with the launch of its own streaming platform, it needs a heavier investment. The flagship content is “The Morning Show” starring Steve Carrell, Reese Witherspoon, and Jennifer Aniston. They’ve hooked other big names too like Oprah and Steven Spielberg, but they lack what brought viewers to Netflix and that’s a proven show. Shows like the The Office, Friends, and Grey’s Anatomy have propelled Netflix. Without a sure-fire hit or the reliance on a proven property, Apple TV+ won’t be a contender even at the $5 a month mark.
3. Apple Needs A Win
Apple has always been an innovator and has given us amazing tech and software. They created an entire content platform with their podcast app. But over the last few years, we’ve seen them begin to sputter. They acquired Beats for $3.2 billion and immediately were immersed in a court battle with Bose. Apple Music boasts 2 million more paid subscribers than Spotify but doesn’t come close to the overall users. Lastly, critics have continually killed Apple TV. (Not the streaming service but the actual hardware.) So Apple can’t afford to let Apple TV+ fail. Any sign that this won’t be a success and Apple will make a move because they can’t afford to let a competitor like Microsoft, Amazon, or Google swoop in.
The bottom line is someone will eventually buy Netflix. Content companies like Netflix don’t stay independent especially when they rack up this amount of debt. It’s hard to fathom a world where Tim Cook and the board of Apple let this easy win pass them by. Even J.P. Morgan analyst Samik Chatterjee agrees. In a recent article, he said, “We believe Apple can drive synergies between its leading position in smartphones and the rapid transition of video consumption to mobile to drive stronger services growth.” Chatterjee also said, “We find Netflix as the best strategic fit, although we appreciate the combination is less likely as Netflix is unlikely to be a seller for a modest premium.” Chatterjee‘s concern over price is justified, but the Netflix stock has been in a tailspin, and the cluttered streaming landscape isn’t helping. By 2022, I believe Apple will own Netflix!
