Talk has recently started about how Apple should buy Netflix in an effort to help boost Apple’s slowing sales and inability to strike a deal with content owners for their own streaming service.
Netflix is a publicly traded company making it harder to prevent a hostile takeover, and Apple has cash on hand to buy Netflix. Although this could happen, it would likely be a disaster for everyone involved—from Apple and Netflix to the users of Netflix.
So why is this a bad idea for Netflix?
This merger would be disastrous for Netflix. Apple has a real issue right now with content owners. After what happened with iTunes and the music industry many content owners have been unwilling to team up with Apple like they did with iTunes. This is evident with Apple’s inability to get a live streaming service launched.
Netflix has also had trouble recently as many are starting to see Netflix is to TV shows and movies what iTune was to music. You can see this in the recent drop in number of titles and Netflix’s move to original content in an effort to bypass content owners.
Putting Netflix and Apple together will just end with more content owners being unwilling to work with both.
So why is this a bad idea for Apple?
Apple struggles from a perception issue so the same problem Netflix has Apple will have also. The real issue Apple would face is taking iTunes and Netflix and combining them could likely result in an antitrust issue with the United States and even more so in the European Union. (In short, anti-trust laws are meant to help protect competition and prevent one side from becoming so large that they dominate the market to the point of abuse.)
Apple will face real issues getting this deal passed—especially in the European Union—particularly if they try to limit Netflix only to Apple devices as many have suggested they should do. This would force Apple to make concessions that would likely remove most of the benefit they would have gotten from buying Netflix.
So why is this bad for Netflix subscribers?
The real losers here are likely to be Netflix subscribers. If Netflix becomes only available on the Apple TV as some have suggested as a way to promote the Apple TV there are three issues that could arise.
First, the move would instantly block millions of Netflix users from accessing Netflix on their TVs.
Second, the Apple TV is one of the most expensive streaming players on the market with the starting price of $150. For many cord cutters on a tight budget picking between a $50 player and a $150 player is a cost that is a hard pill to swallow.
Third, if Apple successfully purchased Netflix it would likely decrease the amount of content on Netflix not increase it.
Overall, in the end, this is just a bad deal for everyone on every side. In the short term it may seem like an easy way to fix Apple’s current struggles; however, in the long run it would likely be a disaster for everyone involved.
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