04/01/2018 – 9:20am
The web is on fire with reports that Apple WILL buy Netflix. According to reports, and because of Trump’s new laws, Apple will acquire the biggest VOD service on the planet for almost $100 billion.
However, the reality is far simpler – Apple will not acquire Netflix.
Why? Simple: the news of the rumoured acquisition, which has been doing the rounds for years, usually during slow news cycles like just after Xmas, is not backed up by any real evidence.
The entire thread of this recent rumour comes via one analyst that predicted a 40% chance that Apple would acquire Netflix in 2018. And in case you’re wondering, that analyst was basically guessing which is why they ranked the probability of it happening so low.
In order to fill newspapers and web pages in the wake of Xmas, posts about what’s going to happen in the coming 12 months are very popular. And posts about diets too. Lots of those. But the fact of the matter is this: Apple will not buy Netflix. Not in 2018. Probably not ever. And there are three good reasons for this.
- First, it’s not even clear whether Netflix would even sell to Apple. The company is growing rapidly and posting massive profits. Why sell now? Why not continue? Surely that makes the most sense for the company and its investors?
- Second, Apple might have A LOT of spare cash laying around but the company is very shrewd with its investments. Its biggest to date was Beats for $3 billion. Netflix, however, would cost Apple 10X that figure, possibly more, and this, combined with the first point, is likely why the source of this rumour wasn’t confident enough to put his prediction at 60%.
- Third and finally, Apple has committed to spending $1 billion a year on original TV programming and movies. It has a platform to do this through, a large install base for its iTunes and Apple TV software, as well as iOS, and it could easily create plenty of content akin to House of Cards and GoT within this spending budget.
Basically, Apple has all the apparatus and infrastructure to do just what Netflix is doing already, so it makes very little sense for the company to spend almost $80-90 billion on Netflix. Hell, Apple’s money would probably be better off spent doing something useful like solving an actual problem that affects huge swathes of humanity – something like cancer or AIDs or food shortages.
$250 billion could do a lot for a lot of people.
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