There are numerous reasons Apple should acquire Netflix. First, there is a matching impression that Netflix earned ninety times more than Apple, and it is expected to earn more than fifty times next year than the same company (Ogg par 1). The company’s revenue that is generated is higher even after experiencing retracts. This implies that integrating Apple and Netflix will result in the formation of a dominant media house that has never been in place before. The acquisition of Netflix may help Apple to move forward, and the movie industry may not be able to press back Apple or charge more the way it does with Netflix. This is because Apple is well established, and it has made a lot of progress in laptops, desktops, as well as other computer technologies (Ogg par 2). As a result, Netflix will be of significant profit for Apple. Another reason that makes Apple purchase Netflix is that the company is arranging for new deals to compensate Comcast for a quicker delivery service. In this view, Apple could presuppose the same agreements with the similar conditions on a prorated basis.
It is critical to note that Netflix has grown in terms of subscriptions, giving it a competitive edge in iTunes (Ogg par 2). In fact, it is attractive for Apple to acquire it based on the fact that it generates huge income. For example, it has recorded an expansion in a subscriber of 2.3 million in the US only. Globally, it showed increase by 2.6 million in the first lap, and it has more than sixty-two million users internationally. This shows that Apple will have an upper hand in making profits if it acquires Netflix. It is crucial to state that overseas expansion is one of the factors behind Netflix development as well as an increase in the revenue generation (Ogg par 3). This is in addition to its prices because most of its consumers are the one who would not wish to purchase costly cables to protect their entertainment. In this context, by acquiring the firm, all the customers will be Apple’s, and it is expected that increase in the number of consumers will lead to more profit generation. Moreover, the organization’s expansion activities are ever on the increase because it has adequate capitals (Sanghoee par 3). The Netflix global strategic approach is expensive, and it has a long way to go. In fact, it requires an enormous amount of money to back its forecasted development (Sanghoee par 4). Therefore, it is ripe for the Apple Company to buy it because it would be a loss if it does not seek to purchase it. What should be understood is that Apple has the potential and stimulus to acquire Netflix. This is despite the fact that the movie and television production may not be the focus of the Apple because it is not possible for it to wait and witness Netflix dominating the world market.
Apple’s products, such as signature iTunes platforms for video downloads are famous, but costly. Evidently, the company can spend $35 for one season while, in Netflix, a customer will only use $8.99, something that allows one to watch other contents (Sanghoee par 5). This shows that Netflix is more popular than Apple because of its prices. It is vital to state that Netflix will continue being a threat to Apple if it does not acquire it because its expansion. Nevertheless, Apple would take some of the Netflix business if it buys it. This is because of its positional pricing. If the consumers favor Netflix, they cannot purchase similar items whose prices are high for Apple. However, if Apple acquires the firm and manages it, it could reduce the losses by those contents that are generating huge revenues for iTunes are not duplicated in Netflix. This implies that the two different services could be sold as harmonizing with each other, giving Apple the competitive advantage because of iTunes wider choice and Netflix benefit because of the low payment model.
Another argument put across for Apple’s acquisition of Netflix is founded on the fact that it will enhance promotion synergy between the Netflix’s worldwide subscriber foundation and Apple’s steady technology. For example, “new users of Netflix could obtain a discount on the newest iPad for enrolling or Apple could bundle a three-month subscription to Netflix with the purchase of Apple TV” (Sanghoee par 6).
From the figures above, it is explicit that the growth rate of NETFLIX is expected to grow in the next years as discussed above. Acquiring a company that is continuing to expand is advantageous in the sense that Apple will increase its revenue generation. However, it is anticipated that this year there will be a decrease by -51.63% considering the last year’s earnings (NASDAQ par 1). Next year, the revenue is expected to rise by 6.3% compared with this year’s anticipated revenue. In fact, Netflix has adequate capital, implying that it will not put Apple into pressure to integrate it. Since the benefits are more than the disadvantages, then, it is recommended that Apple should buy Netflix. It is imperative to warn that acquiring Netflix is costly, but it has a long-lasting effect of boosting Apple’s shares in the global market (NASDAQ par 1). This will be the case if Apple will manage to leverage Netflix’s immense and increasing user base to market more of its products. On the other hand, Netflix is expected to gain from Apple’s excellent marketing technology, international reach, especially in principal markets. This can be achieved if Apple acquires Netflix before it becomes big and costly.
- NASDAQ, Netflix, Inc. Analyst Forecast Earnings Growth. 2015. PDF file. 26 Oct. 2015.< http://www.nasdaq.com/symbol/nflx/earnings-growth.>
- NASDAQ, Netflix, Inc. Analyst Forecast Earnings Growth. 2015. PDF file. 26 Oct. 2015.< http://www.nasdaq.com/symbol/nflx/earnings-forecast.>
- Ogg, Jon, Why Apple should just buy Netflix. 2014. PDF file. 26 Oct. 2015.< http://247wallst.com/media/2014/03/24/why-apple-should-just-buy-netflix/.>
- Sanghoee, Sanjay, Why Apple Should buy Netflix. 2015. PDF file. 26 Oct. 2015. < http://fortune.com/2015/04/21/why-apple-should-buy-netflix/.>
