Apple sits on a huge pile of cash and everyone who follows the company has a list of what the company should do with all the money. High on the list of many is to purchase Netflix. After all, Apple’s forays into television haven’t gone very well, and even the new Apple TV did not become the future of TV, as advertisements promised.
Build? Or, Buy?
Apple’s methodology and track record for product launches is the envy of the industry and diametrically opposed to competitors Google, Samsung, Amazon, and others. Apple remains highly focused and new products tend to sell in high numbers and bring in billions in revenue.
Competitors are so embarrassed by Apple’s successes, numbers, and public stature that they’re the only company that announces publicly what they sell each quarter. No, not dollars. Units. Samsung doesn’t say (and who would believe them if they did?). Google doesn’t say. Amazon doesn’t say.
So, with such a stellar track record of new product launches that add to revenue and profits and prestige, where is Apple’s television business relative to the current darling, Netflix?
Apple could have purchased Netflix years ago, but despite the streaming service’s popularity, all Netflix has going for it is TV and movie deals, and those are but a leaf on the wind, subject to changing conditions and executive whims almost overnight.
It’s All About Profits
We might like to think that apps are the new TV channels, and in some respects that is absolutely true. And Apple is very good at creating platforms that need and spawn applications. Why isn’t Netflix a good fit? Netflix’s market cap is about $40-billion so it’s affordable.
Here’s the problem. Netflix doesn’t make much money. Revenue may be about the same as Apple Watch at $7-billion or so. Profits? Netflix is like Amazon. Profits will come one day. Soon. Just wait and see.
Those who license TV shows, videos, and movies to Netflix can pull those agreements in a heartbeat, and not one of the content producers wants to see Apple become to the video on demand industry what Apple is to the music industry. Dominant.
The Age Of Apps
The thing about The Age of Apps as touted by Apple TV commercials is that apps can play anywhere, everywhere, any device, all the time. Content producers know that so they spread their content around rather than allow what happened to the music industry where Apple once dominated and crushed competition.
Apple still rules in music but stream services like Spotify tend to marginalize media stores and create a single common denominator– streaming music– which is not easily differentiated by anything but price.
Will Apple buy Netflix? I hope not.
Apple needs to do what Apple does best. Change an industry. It seems that Watch has done that so industry changing ways at Apple are not gone, but they’re not changing the one industry we want to see changed. TV.