There’s a good argument that Apple should buy Netflix – Business Insider
Last week, Apple finally
revealed its grand plan to conquer your TV: a new Apple TV
app that brings all your shows and movies together in one place,
and serves you recommendations.
The idea makes sense. Apple thinks apps are the future of TV, and
that eventually you will have separate subscriptions to Netflix,
HBO, Showtime, Hulu, and so on — (maybe you already do).
In that world, it will be annoying to have to navigate a bunch of
different interfaces and menus. So Apple will do it for you, with
a new app called “TV,” which not only works on your Apple TV, but
also on your iPhone or iPad as well.
Apple’s “TV” app will provide you with one place to find new
shows to watch, pick up shows where you left off, and buy
episodes or seasons from iTunes. “The one place to access all
your television,” CEO Tim Cook said last week.
With this app, you can see the outline of Apple’s ambitions for
Apple TV: a universal search, browse, and suggestion platform
that fetches you the right content — as fast as possible.
But there’s a big problem with Apple’s vision: Netflix and Amazon
don’t seem to be on board. Neither company, so far, will be part
of Apple’s new “TV” app.
Netflix, which told Business Insider it was still evaluating the
opportunity, is a particular blow.
Why is Netflix wary? In note this morning, analyst
Ben Thompson explains it this way:
“Apple’s desire to be ‘the one place to access all of your
television’ implies the disintermediation of Netflix to just
another content provider, right alongside its rival HBO and the
far more desperate networks who lack any sort of customer
relationship at all. It is directly counter to the strategy that
has gotten Netflix this far — owning the customer relationship by
delivering a superior customer experience.”
Netflix’s direct relationship to its customers is valuable, and
it doesn’t want to give that up. And the problem for Apple is
that, without Netflix (and Amazon, increasingly), the “TV” app
isn’t compelling. In our current TV landscape, if you don’t have
these two streaming heavyweights, you aren’t providing a “unified
TV experience” (as Cook said Apple wanted).
This is a position Apple doesn’t normally find itself in.
Thompson pointed to Apple’s domination of the music industry,
which played out very differently. “The truth is that Apple’s
executives seem stuck in the iPod/iTunes era, where selling 70%
of all music players led to leverage over the music labels,”
wrote. But the Apple TV is just another streaming box, and
Netflix can already put its content on it with its own app.
Unfortunately for Apple, “selling hardware isn’t a point of
That’s why Thompson makes the case that Apple should buy Netflix.
“If Apple wants its usual ownership of end users it needs to buy
its way in, and that means buying Netflix,” he wrote. Analysts at
argued earlier this month that Apple could use Netflix to
create a competitor to Amazon’s Prime bundle, and move Apple away
from a transactional business model towards a subscription-based
Whatever the reason, Apple would likely have to pay a hefty
premium, and Netflix might not want to sell.
But Apple’s current strategy just doesn’t have the juice to
conquer TV without Netflix and Amazon. It needs something