I could see Apple buying Netflix but from a user perspective it wouldn't improve much. Netflix is awesome as it is. When a new series comes out that i can't wait for I use iTunes. Merging the two services under one name could get very messy. I am not sure it would make much sense for Apple to buy Netflix and keep it like it is - there would have to a be an end goal.
I'm not diagreeing with you when I say that Apple should NOT go anywhere near buying the likes of Netflix or any other "content" company.
How quickly we forget what Apple is supposedly about — making great products to improve peoples' lives, now with services included to make the products function to their fullest, again to make our lives better.
Entertainment doesn't inherently make our lives better, in fact it's easy to argue that it makes our lives worse, as in less authentic and less connected to the real world.
I hate the word "content," and I hate the idea of "consumers of content." The world is falling apart. We got serious work to do figuring out how to set things a little more right again. Sony should never have bought MGM or whatever it was that they choked on and lost their way on.
Apple should stay away from the entertainment "industry." It's poison to the vision they have for their mission. Furnishing better platforms is as close as they should get, because platforms can carry good stuff, if ever the obsession with being entertained starts to diminish.
Hmmm... 'Entertainment' is a loaded term, as is 'content'. Neither make our lives bettrer but they can. Life without content, or entertainment would be dreary, indeed. There is nothing inherently wrong or bad with either. But I agree that the term 'consumers of content' leaves a bad taste -somehow it feels denigrating. When I go to a gallery I don't feel that I 'consume' art even though I paid to get in. I feel that I pay to experience and appreciate whatever is on display.
I agree that Apple probably should stay away from creating content, but if Apple set up a content division of some kind, possibly under a different name, would that be bad? Netflix started out as a mail video rental store. They then went all online before commissioning programmes from scratch. There was no good reason why they should have succeeded and yet they did. I have to say I was sceptical at first, and then very surprised by the consistently high quality level of their drama. Back in the day, if Blockbuster had told us they were making a movie I would have laughed.
So I don't believe Apple will get into the TV / Movie / games content business any more than they got into the creative end of the music business. They are closely related and aligned to both, but I believe Apple is keenly aware what their core strengths are. But never say never.
If Apple bought Netflix wouldn't this cannibalize their own pay to play TV shows and movies?
Apple isn't making $7 billion/year on their 30% from TV show and movie sales. I agree with the notion of Apple buying Netflix and not messing it up. I already pay $10/month to Apple for unlimited music and Netflix $8/month for unlimited TV/movies. I expect Apple could learn quite a bit from Netflix about how to run a best-in-class media platform. Too bad they can't buy Netflix with all that overseas money...
What's to stop "Apple Operations International (AOI)" from buying Netflix?
Netflix market cap = $45.5B USD. Revenue ~$7B, and Net Income ~ $141M. PE = 330.
Pay over $45B, which contributes little to the bottom line, on the expectations of selling some more millions of ATV's? Sounds like Google math, not Apple.
Time Warner would be a better purchase with a market cap of $61b as they own way more original content (e.g HBO), including games and make billions in net income. Netflix is primarily reselling content from the big content providers and Apple already does this. By owning Time warner, Netflix would be paying Apple. Netflix has a lot of subscribers and has international reach with a good brand but the valuation is too high. They'd have been better off buying them a few years ago. Apple could take Time Warner content international and use a subscription model.
Apple was supposedly considering a $30/month subscription option and wanted the main networks involved but they didn't agree to it. The downside to the service route is that to get as many subscribers as Netflix, you would typically have to go cross-platform. Apple could easily make a Netflix service with more/better content by charging a 3x higher subscription but only if they can get the audience. The best platform for video is still the TV unit, not small-screen devices and Apple doesn't have a huge marketshare there yet. Even if they targeted Airplay use, there still has to be something attached to the TV.
If they owned Time Warner and the way to get content was the Apple TV box, they'd boost those sales massively internationally and then they have a solid platform to get other providers like Disney pushing content over it too. They'd be able to manage 100 million Apple TV boxes worldwide with HBO.
$60b seems like a lot to put out but Time Warner are making just under $4b net income per year now. That could easily pay for itself within a decade if they take their content directly to an international audience. They can merge the Music (and perhaps games) subscription in so that people pay once for all their entertainment and it's always available anywhere in the world and on iPhone/iPad. If they bought Time Warner first and had their original content, subscribers would migrate from Netflix and then their valuation would fall. They'd be able to buy Netflix later when the valuation was more reasonable ($10-15b) and they'd essentially be buying subscribers.
Apple doesn't really need to buy a content company at all and they've said this in the past. I think it makes sense for the long-term because people will always want content even when hardware upgrade cycles get longer.
I agree that Time Warner would be much better value for the money. From a purely theoretical perspective, they could keep the content development / studio branches like HBO, Warner Bros., and sell the rest (TV channels like TBS, cable channels like CNN, etc). Having one's own studio gets you into the game, and would indeed boost the ability to work with other content owners via mutually beneficial licensing agreements. Much more financially palatable, with more content, than Netflix.
However, I am skeptical that Apple would go the route of making a large purchase just to have that content. It isn't a "bad move" per se, but one that I suspect Apple would deem not as an efficient use of their money, vs. other options to pursue (in health care, transportation, etc). In the end, you can use some more $$ to muscle into content licensing, without having to pay over $60B for Time Warner.
Netflix market cap = $45.5B USD. Revenue ~$7B, and Net Income ~ $141M. PE = 330.
Pay over $45B, which contributes little to the bottom line, on the expectations of selling some more millions of ATV's? Sounds like Google math, not Apple.
Time Warner would be a better purchase with a market cap of $61b as they own way more original content (e.g HBO), including games and make billions in net income. Netflix is primarily reselling content from the big content providers and Apple already does this. By owning Time warner, Netflix would be paying Apple. Netflix has a lot of subscribers and has international reach with a good brand but the valuation is too high. They'd have been better off buying them a few years ago. Apple could take Time Warner content international and use a subscription model.
Apple was supposedly considering a $30/month subscription option and wanted the main networks involved but they didn't agree to it. The downside to the service route is that to get as many subscribers as Netflix, you would typically have to go cross-platform. Apple could easily make a Netflix service with more/better content by charging a 3x higher subscription but only if they can get the audience. The best platform for video is still the TV unit, not small-screen devices and Apple doesn't have a huge marketshare there yet. Even if they targeted Airplay use, there still has to be something attached to the TV.
If they owned Time Warner and the way to get content was the Apple TV box, they'd boost those sales massively internationally and then they have a solid platform to get other providers like Disney pushing content over it too. They'd be able to manage 100 million Apple TV boxes worldwide with HBO.
$60b seems like a lot to put out but Time Warner are making just under $4b net income per year now. That could easily pay for itself within a decade if they take their content directly to an international audience. They can merge the Music (and perhaps games) subscription in so that people pay once for all their entertainment and it's always available anywhere in the world and on iPhone/iPad. If they bought Time Warner first and had their original content, subscribers would migrate from Netflix and then their valuation would fall. They'd be able to buy Netflix later when the valuation was more reasonable ($10-15b) and they'd essentially be buying subscribers.
Apple doesn't really need to buy a content company at all and they've said this in the past. I think it makes sense for the long-term because people will always want content even when hardware upgrade cycles get longer.
Netflix is overpriced but you can't deny the fact that it would boost the Apple ecosystem.
" Netflix and chill "
Netflix is a commodity. Heck AppleTV competitors have a damn Netflix button. Buying Netflix would be a slap in the face to all competitors.
I seem to recall that there are provisions in Netflix' agreements with content providers that those agreements wouldn't transfer along with the sale of the company, which is one reason why they've been generating their own shows and programming. They're so much like early MTV that it's not even funny. MTV was at the mercy of the record labels, so they pushed into their own programming in a big way.
Netflix market cap = $45.5B USD. Revenue ~$7B, and Net Income ~ $141M. PE = 330.
Pay over $45B, which contributes little to the bottom line, on the expectations of selling some more millions of ATV's? Sounds like Google math, not Apple.
Time Warner would be a better purchase with a market cap of $61b as they own way more original content (e.g HBO), including games and make billions in net income. Netflix is primarily reselling content from the big content providers and Apple already does this. By owning Time warner, Netflix would be paying Apple. Netflix has a lot of subscribers and has international reach with a good brand but the valuation is too high. They'd have been better off buying them a few years ago. Apple could take Time Warner content international and use a subscription model.
Apple was supposedly considering a $30/month subscription option and wanted the main networks involved but they didn't agree to it. The downside to the service route is that to get as many subscribers as Netflix, you would typically have to go cross-platform. Apple could easily make a Netflix service with more/better content by charging a 3x higher subscription but only if they can get the audience. The best platform for video is still the TV unit, not small-screen devices and Apple doesn't have a huge marketshare there yet. Even if they targeted Airplay use, there still has to be something attached to the TV.
If they owned Time Warner and the way to get content was the Apple TV box, they'd boost those sales massively internationally and then they have a solid platform to get other providers like Disney pushing content over it too. They'd be able to manage 100 million Apple TV boxes worldwide with HBO.
$60b seems like a lot to put out but Time Warner are making just under $4b net income per year now. That could easily pay for itself within a decade if they take their content directly to an international audience. They can merge the Music (and perhaps games) subscription in so that people pay once for all their entertainment and it's always available anywhere in the world and on iPhone/iPad. If they bought Time Warner first and had their original content, subscribers would migrate from Netflix and then their valuation would fall. They'd be able to buy Netflix later when the valuation was more reasonable ($10-15b) and they'd essentially be buying subscribers.
Apple doesn't really need to buy a content company at all and they've said this in the past. I think it makes sense for the long-term because people will always want content even when hardware upgrade cycles get longer.
Netflix is overpriced but you can't deny the fact that it would boost the Apple ecosystem.
" Netflix and chill "
Netflix is a commodity. Heck AppleTV competitors have a damn Netflix button. Buying Netflix would be a slap in the face to all competitors.
I seem to recall that there are provisions in Netflix' agreements with content providers that those agreements wouldn't transfer along with the sale of the company, which is one reason why they've been generating their own shows and programming. They're so much like early MTV that it's not even funny. MTV was at the mercy of the record labels, so they pushed into their own programming in a big way.
But even more like HBO, no? HBO (Home Box Office) in its modern era started very much like Netflix, by licensing content (primarily movies) as a premium service delivered as a package to cable/satellite subscribers. Licensing some exclusive content like boxing. And then later developed their own programming, such that it came to dominate the value of their offering.
Comments
I agree that Apple probably should stay away from creating content, but if Apple set up a content division of some kind, possibly under a different name, would that be bad? Netflix started out as a mail video rental store. They then went all online before commissioning programmes from scratch. There was no good reason why they should have succeeded and yet they did. I have to say I was sceptical at first, and then very surprised by the consistently high quality level of their drama. Back in the day, if Blockbuster had told us they were making a movie I would have laughed.
So I don't believe Apple will get into the TV / Movie / games content business any more than they got into the creative end of the music business. They are closely related and aligned to both, but I believe Apple is keenly aware what their core strengths are. But never say never.
However, I am skeptical that Apple would go the route of making a large purchase just to have that content. It isn't a "bad move" per se, but one that I suspect Apple would deem not as an efficient use of their money, vs. other options to pursue (in health care, transportation, etc). In the end, you can use some more $$ to muscle into content licensing, without having to pay over $60B for Time Warner.