Here’s the best argument for Apple buying Netflix – CNBC

Netflix is fueling a surge of revenue growth for Apple’s App Store, according to data released by analytics firm Sensor Tower on Tuesday.

Spending rose 130 percent year-over-year in 2016 in the “entertainment” category of the App Store, which includes HBO Now, Hulu and Netflix, according to data from Sensor Tower. Netflix in particular saw revenue hit $58 million in the fourth quarter, up from just $7.9 million a year earlier, Sensor Tower said, in a report released on Tuesday.

The data comes as investors are increasingly asking if Apple should buy an entertainment technology company, like Netflix, to draw down its enormous pile of cash and boost ambitious plans for the App Store.

Apple has said it wants to double its “services” revenue, including the App Store, by 2020. But despite having more than $240 billion in cash, Apple has resisted making a major acquisition, and Netflix hasn’t given any hints, either.

“[I]f we wanted to do what everybody else is doing, then you’re right, we might be better off buying somebody or doing that,” Eddy Cue, Apple’s head of content, said at Recode’s Code Media conference earlier this month. “But that’s not what we’re trying to do. We are trying to do something that’s unique.”

Entertainment apps only account for about $2.30 of the $40 that U.S. iPhone owners spent on apps in 2016, Sensor Tower said, behind games and music. Still, Sensor Tower’s data shows why industry watchers, like technology investor Eric Jackson, have said Apple “clearly should have bought Netflix.”

Apple does not break out App Store spending separately from its $7.17 billion quarterly services revenue. But CNBC has reached out to Apple and Netflix for comment.

Correction: This story has been updated to accurately reflect Netflix’s App Store revenue in the fourth quarter of 2016 and the corresponding year-ago period.

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