Will Apple Take a Bite Out of Netflix & Purchase the Streaming Juggernaut?
New year — New predictions. This is the one that’s been kicking around for a couple of years.
Keith R. Higgons
Recently, no less than The Hollywood Reporter released its predictions for 2020, among which Hollywood and financial notables theorized that Apple would purchase Netflix. Now, I realize THR is not a financial news source…BUT, 24/7 Wall Street noted:
If there is a marriage that will happen among the streaming companies in the near term, it will be between Apple, which has money and a distributed base of hundreds of millions of devices, and Netflix...
Now, I do Apple will buy Netflix. For me, it’s not a question of “if” but a question of “when.” I’ve been prattling about this for a couple of years now to mostly befuddled (at best) and deaf (at worst) ears.
- Apple currently has well over 200 billion dollars in cash.
- Netflix has a market capitalization of about 145 billion.
So, why exactly do I think that Apple will buy Netflix?
HISTORY TELLS US AS MUCH
In the case of Apple, you need to only look at what they did with subscription music services. They tried building one, it faltered…so they purchased Beats, which had a marginally more successful subscription service (I can only suspect Spotify wouldn’t sell). While that hasn’t yielded the results they had hoped for, it consolidated the market.
Not only that, but Apple purchased the skills and ears of Beats co-founder, music industry, producer and label veteran Jimmy Iovine for an “undisclosed position.” Iovine began his career working with John Lennon and has, in one way or another, touched a large swath of classic rock albums from Bruce Springsteen to Lady Gaga.
To be fair, Apple also got Dr. Dre but his current role within Apple, if he has one, is unknown.
Now, with virtually every single company launching a streaming service, the next couple of years will see a pretty profound consolidation in this space.
And it makes sense that the computer hardware leader would purchase the streaming leader that currently oversees a production budget north of 15 billion dollars.
Not only that, but they would (seemingly) acquire the green lighting savvy of Netflix creative head Ted Sarandos (Three Grammy Award Nominations, Six Academy Awards in three years, 31 Creative Arts Emmy Awards in six years and ).
While Apple has dipped its toe into the streaming service with marginal success. There have been loads of hullabaloo around the shows, even a few Emmy nominations but that doesn’t necessarily mean they’re getting a foothold.
Not that I am a bellwether, but I have not watched, or sought out, any of their shows…and I watch A LOT of television but none of their shows are interesting:
- The Morning Show? Don’t care — and I love Steve Carrell.
- A re-hash of Steven Spielberg’s Amazing Stories? Why?
- Servant — from M. Night Shyamalan? They still let him make stuff?
- Dickinson — This is about Emily Dickinson…need more be said?
- For All Mankind — Okay, I tried this one…lasted about 15 minutes.
The Apple streaming service is headed up by Jamie Erlich and Zack Van Amburg, the guys behind such shows as The Blacklist, Breaking Bad, Better Call Saul and Netflix’s own The Crown — that’s a pretty good track record. However, Apple is spending a fraction of what Netflix is spending on content (+/- six billion versus +/- 15 billion).
With that kind of disparity in original content investment, simply put, isn’t a competition.
Lastly, the two guys leading the Apple content charge, Erlich and Van Amburg, are content people…who already have a relationship with Netflix with The Crown — that may not mean anything, but worth noting.
Also worth noting is that Apple just signed a five-year exclusive deal with former HBO chief Richard Plelper.
Apple acquiring a pre-existing streaming service seems the most likely way for them to get a foothold in the market and become a player.
However, they’re not going to purchase Disney. Disney is a classic old school company and Silicon Valley companies aren’t known to go off the reservation when acquiring companies…in particular, anything that is this high profile.
Let’s face it, when it comes to original streaming content online there are only two players, Netflix and Amazon (Hulu is still a wild card in my opinion). There are some smaller players like Facebook and Snapchat(?) — but don’t believe the hype, their original content plays will amount to bupkis.
The big’ uns are Netflix and Amazon. For Apple to build up an entire streaming content service from scratch, at this point, it isn’t just a Herculean task, it’s a Sisyphean one.
The only way for Apple to compete is to purchase its way into the game…Disney? Nope. Hulu? Nope. Amazon? Nope — I’m pretty sure Jeff Bezos won’t stop until Amazon dominates the world.
That leaves Netflix. Mark my words…again.
Ah, but when you ask?
Beats me. If I had that kinda foresight, I’d be wintering on St. Bart’s and not freezing my arse off in the northeast.
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Keith R. Higgons