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[badcrumble]

Is Netflix having that much money trouble, though? I know he goes over their risks in the article, but it seems like they're doing very well on their own, on the balance.

I'd neither be for nor against this, really. I'd be fine if it happened and fine if it didn't. I only think it'd be bad if Apple made Netflix exclusive to their own devices (but that's such an obviously bad idea that they'd obviously never do it).

I'd like to see Apple fix Apple Music and get it up to or beyond the quality of Spotify (which mainly means further improving the UI and adding real social features - their libraries are roughly equivalent in quality - but it'd be really nice for them to get a lot more major independent labels like Defected Records signed up in full). After that they can start focusing more on video/tv.

This is kind of useless without his follow up the next day which was: Apple Shouldn't Buy Netflix

It's subscribers only though so I wont be posting it

Can you give the overall gist of his counterargument via brief paraphrase, then?

 

[faisal233]

In his proposal, free Netflix subs for Apple device owners is the "get". While those outside of the Apple ecosystem will have to pay monthly.

That would be interesting. How would that work with used Apple devices? A license included in the box?

How does netflix make any money after everyone buys an apple tv for lifetime free access?

 

[Exile20]

Why not?

What if Apple's warchest allows Netflix to fund more original content?

Because apple has done nothing original in years.

 

[bronson]

This proposal would not be for exclusivity in Apple devices, though.

Which is why it's entirely irrelevant. Apple isn't in the business of open platforms, and there's no reason to think they will be in the forseeable future. Saying "Yeah, but what if they WERE?" doesn't really prove any points or provoke any thought. The reason for Apple to buy Netflix would be to drive people to its devices and its ecosystem, which would be entirely nullified by keeping the app available everywhere.

As long as Netflix's goals here are "a dedicated userbase and a massive cash pile," Apple could be replaced by any huge conglomerate with lots of money, like AT+T or Comcast.

 

[karobit]

I also think good things should happen without their logical downsides following! My hot takes!

 

[entremet]

Because apple has done nothing original in years.

Apple would not be handling programming here. That would be Netflix.

 

[Frodo]

I'd much rather have Disney buying it than Apple.

Because apple has done nothing original in years.

 

[A-V-B]

I would be perfectly okay if no one bought Netflix. New blood is pretty cool sometimes and I'd love to see what they do on their own steam. They've gotten this far on it.

 

[B-Dubs]

Which is why it's entirely irrelevant. Apple isn't in the business of open platforms, and there's no reason to think they will be in the forseeable future. Saying "Yeah, but what if they WERE?" doesn't really prove any points or provoke any thought.

In this dream/nightmare scenario Apple could be replaced by any huge conglomerate with lots of money, like AT+T or Comcast.

Which is the elephant in the room. Even if Apple does buy Netflix and keeps it open to everyone, at some point down the line it will make too much business sense to make it exclusive to the Apple ecosystem. Their hand might be forced by competition or they might just realize how much money there is to make that way. It's something that will happen if Netflix is bought by Apple. Maybe not overnight, but it would happen.

 

[daveo42]

In his proposal, free Netflix subs for Apple device owners is the "get". While those outside of the Apple ecosystem will have to pay monthly.

That would be interesting. How would that work with used Apple devices? A license included in the box?

I think that's too much of a split depending on what he means by that. Do you get it for free if you have your iPad or iPhone registered as a device on the account? Do you need a separate license for your Smart TV, Roku, ChromeCast, Blu-Ray player or game console? How would the market react to news if it's the second case? Integration of additional features into Netflix on an Apple device is a much smarter move than cutting out the portion not.

Splitting your base is assuredly a bad move unless he feels losses are small enough to not matter.

 

[entremet]

I'd much rather have Disney buying it than Apple.

They probably will.

Netflix will get bought.

 

[badcrumble]

In his proposal, free Netflix subs for Apple device owners is the "get". While those outside of the Apple ecosystem will have to pay monthly.

That would be interesting. How would that work with used Apple devices? A license included in the box?

Does he actually say anything about free Netflix subscriptions for Apple device owners, though? I think it really just means strong/preferential integration into Apple's ecosystem while keeping Netflix available elsewhere.

Which is why it's entirely irrelevant. Apple isn't in the business of open platforms, and there's no reason to think they will be in the forseeable future. Saying "Yeah, but what if they WERE?" doesn't really prove any points or provoke any thought. The reason for Apple to buy Netflix would be to drive people to its devices and its ecosystem, which would be entirely nullified by keeping the app available everywhere.

As long as Netflix's goals here are "a dedicated userbase and a massive cash pile," Apple could be replaced by any huge conglomerate with lots of money, like AT+T or Comcast.

apple music is available on windows and android and the itunes store is available on windows

 

[Stumpokapow]

Netflix is already producing more original content than any network or cable outlet, and still on an accelerating content production trend. The stated argument that higher cash-on-hand would free them to do more original content seems at odds with the fact that they're already doing the most original content of anyone in the world. At this point the weakness of their original content strategy seems to be that they have so much it's hard to program or give stuff breathing room, not that they have so little because they're cash poor.

 

[B-Dubs]

They probably will.

Disney makes more sense, and would be far better as a purchaser for consumers.

 

[badcrumble]

Netflix is already producing more original content than any network or cable outlet, and still on an accelerating content production trend. The stated argument that higher cash-on-hand would free them to do more original content seems at odds with the fact that they're already doing the most original content of anyone in the world. At this point the weakness of their original content strategy seems to be that they have so much it's hard to program or give stuff breathing room, not that they have so little because they're cash poor.

Yeah, honestly the best argument against this isn't that Apple would do something to make Netflix worse or less available (it's hard to find precedent for that, given that iTunes and Apple Music are both widely available), it's that Thompson is overstating how much Netflix needs the help (from anyone).

Disney makes more sense, and would be far better as a purchaser for consumers.

It's generally a better match and Disney's certainly more accustomed to massive acquisitions in the entertainment industry - the only downside to that one would be that non-Disney content producers might be more averse to inking deals with Netflix if they were also basically giving revenue to the industry's biggest heavyweight.

 

[entremet]

How does netflix make any money after everyone buys an apple tv for lifetime free access?

I think that's too much of a split depending on what he means by that. Do you get it for free if you have your iPad or iPhone registered as a device on the account? Do you need a separate license for your Smart TV, Roku, ChromeCast, Blu-Ray player or game console? How would the market react to news if it's the second case? Integration of additional features into Netflix on an Apple device is a much smarter move than cutting out the portion not.

Splitting your base is assuredly a bad move unless he feels losses are small enough to not matter.

Does he actually say anything about free Netflix subscriptions for Apple device owners, though? I think it really just means strong/preferential integration into Apple's ecosystem while keeping Netflix available elsewhere.

apple music is available on windows and android and the itunes store is available on windows

I believe I misread.

He just said make Netflix available on Apple devices by default.

Don't really get the reasoning there in driving more subs as Netflix is already one of the most popular apps across iOS/tvOS already.

Disney makes more sense, and would be far better as a purchaser for consumers.

Could be?

That's an interesting take because I would think Disney would interfere more with creative at Netflix than Apple, which has no storytelling legacy like Disney.

 

[Hex]

Fuck Ben fuckface and fuck Apple.
Keep Apple away from my shit.
Aside from hardware Apple creates stagnation.
Itunes is fine but it is boring, Apple music sucks (imo), Apple tv never reached its aspirations.

 

[snacknuts]

In his proposal, free Netflix subs for Apple device owners is the "get". While those outside of the Apple ecosystem will have to pay monthly.

That would be interesting. How would that work with used Apple devices? A license included in the box?

There is zero chance of Apple doing this. Let's make a very conservative estimate and say that 40% of Netflix subscribers in the US own an Apple product (iPhone, iPad, or Mac). Apple is 1) not known at all for giving anything away (see the ridiculous situation right now for hooking up a brand new iPhone to a brand new MacBook Pro) and 2) would not spend the kind of cash required to buy Netflix just to instantly slash their revenues by 40%.

 

[Charles Brandon]

I dread to think what creepy shit those guys would come up with if they decided to take creative control. Ugh.

 

[StarVigil]

Why would you say such a horrible thing?

 

[entremet]

There is zero chance of Apple doing this. Let's make a very conservative estimate and say that 40% of Netflix subscribers in the US own an Apple product (iPhone, iPad, or Mac). Apple is 1) not known at all for giving anything away (see the ridiculous situation right now for hooking up a brand new iPhone to a brand new MacBook Pro) and 2) would not spend the kind of cash required to buy Netflix just to instantly slash their revenues by 40%.

Yeah, I misread.

He meant have Netflix preinstalled in Apple devices.

 

[ReAxion]

Does he actually say anything about free Netflix subscriptions for Apple device owners, though? I think it really just means strong/preferential integration into Apple's ecosystem while keeping Netflix available elsewhere.

It's stated as something that could drive up subscriptions.

While Apple should keep Netflix cross-platform (limiting Netflix to Apple devices would be massively value destructive — Netflix’s value is predicated on being everywhere — and not even that helpful given that Apple’s devices already dominate their price points), that doesn’t mean that making Netflix available by default on every Apple device wouldn’t have the potential to drive Netflix subscriptions. This could be especially effective internationally where Apple’s brand is much stronger than Netflix’s.

And this is why Netflix shouldn't just be by itself:

Apple’s bank account will also allow Netflix to accelerate its strategy of complete ownership of original content.

It's all under what the payoffs for Netflix would be, and they're very good from a Netflix perspective.

 

[leakey]

Nah I'd rather keep Netflix independent. I would die if all of Netflix went into some shitty Apple ecosystem.

 

[andythinkpad]

Apple is not a content creation company, they will fuck up the Netflix shows like they fuck up their cloud services.

 

[badcrumble]

I believe I misread.

He just said make Netflix available on Apple devices by default.

Don't really get the reasoning there in driving more subs as Netflix is already one of the most popular apps across iOS/tvOS already.

The power of the default install is a big deal. Many more iOS users use Apple Maps than Google Maps, for example, even though the latter is pretty much universally agreed to be the superior product. There are whole swathes of basically untapped users out there who barely touch the App Store, or if they do, they just use it for games.

And this is why Netflix shouldn't just be by itself:


It's all under what the payoffs for Netflix would be, and they're very good from a Netflix perspective.

Yeah, upon rereading, it's not that he's saying Netflix is in crisis and needs saving, it's that they're doing quite well but having Apple's cash reserves behind them could basically let them take over the world overnight by taking away the one factor that's holding them back.

 

[Extra Sauce]

I'm supposed to believe that an Apple takeover would not eventually penalize Netflix users who are outside of the Apple ecosystem somehow?

 

[RedHill]

Why not?

What if Apple's warchest allows Netflix to fund more original content?

Because that is never how this works. That's a fanfic dream.

 

[entremet]

Because that is never how this works. That's a fanfic dream.

It already happened with Disney--Marvel, Star Wars.

How many more movies of those are we getting now? How many more spinoffs and projects?

Star Wars especially is seeing way more volume of media since the Disney bought them.

 

[badcrumble]

Because that is never how this works. That's a fanfic dream.

Beats Music is in much better shape after being purchased by Apple. Look at how many more users they got for their previously-tiny music service.

 

[entremet]

Apple is not a content creation company, they will fuck up the Netflix shows like they fuck up their cloud services.

This is why they're buying them, bud lol.

You guys, man lol.

Amazon wasn't a gaming company and they bought a couple. Guess what? They're a content creation company now. Same with their PrimeTV original stuff.

 

[postmodernism]

A cursory search values Netflix around $50 billion, and you'd need to pay a premium to acquire them. The same cursory search reveals Apple has $16 billion in readily-available cash, and would need to sell some of their $200 billion in overseas assets at a 40% tax liability, so all-in acquiring Netflix would likely cost them somewhere in the area of $100+ billion, regardless of the actual purchase price.

In what world does this make sense?

Netflix is already producing more original content than any network or cable outlet, and still on an accelerating content production trend. The stated argument that higher cash-on-hand would free them to do more original content seems at odds with the fact that they're already doing the most original content of anyone in the world. At this point the weakness of their original content strategy seems to be that they have so much it's hard to program or give stuff breathing room, not that they have so little because they're cash poor.

Seriously. They're not hurting for money, and they already have TOO MUCH original content. The thesis of "Apple's massive warchest unlocks Netflix" is flawed.

 

[DragonSworne]

Netflix gains nothing from Apple. The authors arugments are pretty flimsy for why Netflix would look for acquisition.

 

[LQX]

No as prices will almost double. If bought no doubt prices will jump to close $20 a month.

 

[yyzjohn]

No as prices will almost double. If bought no doubt prices will jump to close $20 a month.

Prices will double and Netflix will stop working on anything not apple made.

 

[entremet]

Netflix gains nothing from Apple. The authors arugments are pretty flimsy for why Netflix would look for acquisition.

The article is written from Apple's perspective. The excerpt is him detailing the benefit for both companies.

I would supposed an article written from Netflix perspective would provide more details on why it would be a poor choice.

Incidentally, he did write another one, a follow up, going over why it would be a bad buy for Apple. It's behind his paywall, though.

 

[andythinkpad]

This is why they're buying them, bud lol.

You guys, man lol.

Amazon wasn't a gaming company and they bought a couple. Guess what? They're a content creation company now. Same with their PrimeTV original stuff.

Apple can buy whatever they want. Apple's culture will fuck up Netflix. That's what I said.

Amazon has been creating TV content in a while. And they own imdb, dpreview, and Audible since forever. Dpreview and Audible product their own contents.

 

[StudioTan]

God no. That would be terrible for consumers.

 

[Ferrio]

Man someone has drank the kool-aid.

 

[soco]

article a waste of time. don't bother reading.

let's pray this never happens.

 

[BarringGaffner]

Why not?

What if Apple's warchest allows Netflix to fund more original content?

so far with Netlfliz more content = more content to avoid, like TV.

So much better as a focused service. People want the next stranger things every week or something but Apple won't give us that.

 

[entremet]

so far with Netlfliz more content = more content to avoid, like TV.

So much better as a focused service. People want the next stranger things every week or something but Apple won't give us that.

Netflix wants 50 percent of its library to be original content

Also, it's a bit different with OnDemand stuff like Netflix. A huge and diverse library of content is beneficial. You're time shifting, not channel surfing.

 

[icespide]

Let's wait a few years and have Netflix buy Apple instead.

lol

 

[Buba Big Guns]

Hell no.

Are we somehow to believe Apple wouldn't jack up the prices to some stupid level like all their other products? Or people who don't own an apple product would somehow get screwed over in some other way?

 

[Macam]

Nope.

It isn't in Apple's DNA and would basically need to marry Apple's cash flows with Netflix as-is, and that doesn't make a lot of sense given the corporate history of acquisitions by Apple and their current focus. It would also end up potentially being enormously detrimental to Netflix consumers and undercut a key ingredient of Netflix's success (being everywhere), since Apple has a poor record of multi platform development both in terms of commitment as well as quality.

Basically, this is fun speculation from a financial perspective, but little else.

 

[bronson]

apple music is available on windows and android and the itunes store is available on windows

Yeah, but presumably Apple's Netflix would follow the App Store approach -- so it wouldn't be available on Rokus, Xbox/Playstation and any other box that isn't an Apple TV. The whole concept of the buyout is at odds with their current business model.

 

[badcrumble]

Prices will double and Netflix will stop working on anything not apple made.

they would remove the headphone jack from netflix

 

[eyeball_kid]

As a stockholder and someone in the Apple ecosystem, I think buying Netflix would be a good move. Helps them diversify and gives them a leg up on content for their ecosystem, especially as Netflix hasn't been playing ball with Apple's new TV service.

But looking more broadly, I don't think any of these platform tech companies should be in the content game. In fact I think Congress should pass a law preventing it. Because all it does is make them new cable companies, except it'd be like the company you get cable service from also having exclusive rights to Game of Thrones. So I'd go so far as to say mixing tech platforms and content violates anti-trust law. Content exclusives reduce choice for consumers.

 

[RibMan]

One of my papers in college (PLC and innovation class) was about this very same topic. Interesting to see it pop up again!

My argument at the time (for Netflix) was that they needed to create and license as much content as possible in order to remain the global leader in movie and TV streaming. To do that, they needed more money than they generated via subscriptions. This is back when they hadn't begun expansion of the service into emerging and younger markets.

My argument for Apple was that their approach to TV -- an app first philosophy delivered through proprietary hardware -- would be useless without more exclusive content than everyone else. Netflix solves this for Apple. What Netflix also solves is it gives Apple access to billions of devices that have absolutely nothing to do with Apple. PlayStations, Xbox's, all Samsung phones, all Google phones, all Roku's, all Vizio 'smart' TV's, etc. Basically, Netflix could be utilized by Apple to convert millions of people into Apple product users. This is incredibly useful in emerging and younger markets where Apple devices aren't as competitive, price-wise, with products from Google and Samsung. Furthermore, Apple needs to convert their money ocean into growth for the company, and acquiring a large firm is an effective way to make the numbers brighter across the board.

The biggest challenges to the acquisition would be integration of Netflix into Apple aka who keeps their job and who doesn't, adopting and or managing advertisements, subcription pricing, managing relations with companies that despise Apple (e.g. Google, Microsoft), functionality of the service on older non-Apple devices aka legacy support, and potential ethical differences between the two companies. Obviously, there would be lawyers and aggresively bored humans, somewhere, claiming monopolization and anti-competition practices etc. but Apple would be able to deal with such claims.

 

[Owari]

I think instead of buying Netflix they should just make a Netflix-killer AppleTV app that uses the iTunes movie catalogue with a (more) expensive sub. I'd drop Netflix in an instant for a real selection of content at a higher price.

 

[PhantomX1313]

Nestle should buy pornhub