Competing reports have surfaced which say that either Apple is buying Netflix or it’s going to start its own streaming service.
Let’s see the if any of these two scenarios are even possible at all and if yes, what its effects are going to be.
Now the first obvious question is that can Apple just straight up afford to buy Netflix. Well, the answer to that is yes.
Netflix is currently valued at around $160 million. This is comfortably within the $280 million cash that Apple has to spend, with more coming in everyday.
It has not been a good couple of months for Apple. With decreasing iPhone sales, questionable product choices and for the first time in history, it missing its projected revenue targets, Apple has struggled. Much of it can be attributed to the smartphone market landscape changing.
Smartphone innovation has really plateaued. They have gotten as good as they could, it makes less sense upgrading every year or two. And Apple’s entire business model hinges on it making its users buy more and more phones.
Additionally, places which have seen a rise in new smartphone users have largely rejected Apple’s products because of their high price.
This has led to Apple revising its business strategy to focus more on its services instead of hardware. These services include Apple Music, iCloud, and the App Store.
There has also been an increased focus on AI which points towards Apple’s plans to improve Siri and enter the smart home and digital health market.
If Apple buys out Netflix, then it’s a win-win situation for the both of them. Apple gets access to the high quality content being produced by Netflix and the production pipeline it has set up.
It can then market this content to its user base and even include Netflix as a default app in iPhones and iPads, increasing Netflix’s reach and user base.
The cash infusion from Apple will also allow Netflix to grow and expand its content catalogue more and invest in better tech to enrich user experience.
But where Netflix relies on using the data it collects to improve user experience, Apple is notoriously data collection averse. This might be the straw that breaks the camel’s back and prevent the deal from going through.
The likelier scenario seems a new streaming service started by Apple itself. Not only would it follow the trend of the likes of Disney starting their own services, it would fall in line with Apple’s own strategy.
Apple always enters the market late, makes the best products after learning from everyone else’s mistake and then wins the consumers.
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If it starts its own streaming service and offers a decent catalogue of shows, it would steal a lot of users away from Netflix, Amazon Prime and Hulu since this service will probably be discounted for Apple users, if not free.
Apple can use the home ground advantage to push their offering and push down the others.
Additionally, Apple’s huge piles of cash would mean a lot of money for new shows and the licenses of popular shows. According to reports a lot of top media companies including HBO are in negotiations with Apple regarding this, but Netflix doesn’t seem to be a part of this.
Apple, however, is going to make sure that it wins out in the end. Whether it is by starving out Netflix by using their huge piles of cash or by stealing away their users and then buying them at cheaper price, Apple will fight tooth and nail to win.
The streaming service market is soon going to be disrupted. With multiple players trying to enter the field, it will either be a great move for consumers with services becoming cheap or a really bad one with services becoming more and more expensive.
Reach the blogger at: @tanmaymay_
Image Credits: Google Images
Sources: CNBC, Forbes, The Verge
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