Does Apple Need to Dethrone Netflix to Succeed with Much-Hyped Video Service?

Rumors that an Apple streaming service was in the works have been running rampant for months.

While Apple has not confirmed anything, several news outlets reported Wednesday that “sources familiar with the matter” told them about Apple’s efforts being close to coming to fruition. The exact date varies, but it appears the rollout wil happen  some time in the spring.

Many had expected the announcement to be made during Apple’s Next Big Thing Event, which is scheduled for March 25, according to MacRumors.

Much hoopla is typically made about the event as Apple fanboys, investors and the curious wait with bated breath to see Apple’s latest gadget, or gadgets.

What’s in Apple’s Streaming Wheelhouse and What’s Blatantly Not

Apple’s streaming TV service will likely include subscription TV services from CBS and Viacom, according to Reuters. It reported that the service will also include Lions Gate Entertainment’s Starz.

Blatantly not in the lineup are Netflix, Hulu, and Amazon Prime Video. They are useless to Apple largely because it intends to offer its own original content. CNBC pointed out that in addition to these original content providers, HBO may not be included either.

Apple will offer its original content for free for device owners and a subscription platform for existing digital services, according to CNBC. Customers will be able to sign up for existing digital streaming products and watch them in Apple’s iOS TV application.

What About Apple Needing to Just Buy Netflix?

JPMorgan analysts recently joined many in suggesting that Apple should just buy Netflix. The reason relates to Apple’s flagship iPhone experiencing revenue declines because of slowing sales. Many see now as a good time for the company to look for other income streams.

During the company’s fourth quarter 2018 earnings call, CEO Tim Cook attributed Apple’s unusually poor performance to the potential tension between China and the U.S. However, analysts have said that the trade war and the decline of the Chinese economy had minimal impact on the sales of iPhone.

No matter, Banter about Apple needing to buy something has continued. Some suggestions have even included the iPhone maker acquiring Sonos or Activision Blizzard. CCN reported that Apple had been secretly planning a gaming subscription service, likened to a “Netflix for games” since early 2018. The development is likely in its early stages and could even be a non-starter for the phone maker.

Does Apple Really Need To Buy Anything Right Now?

Considering Apple is sitting on about $254 billion of cash, it can afford to buy any of these companies. Sonos is valued at $1.16 billion and Activision Blizzard’s valuation is $34.4 billion.

Netflix would be the most expensive, and less ideal. It’s valued at about $152 billion. An opinion writer for Bloomberg said this about Apple buying Netflix.

“Apple may not need a coherent strategy, a wow product or Netflix-like subscriber numbers to declare victory — albeit a minor one — for its video service. What if the bar for Apple’s video service isn’t an entertainment-changing juggernaut like Netflix Inc., but something else? What if it’s HBO, and Apple is effectively its own cable television company selling it?”

Apple CEO Tim Cook talked about the company’s streaming services during the Q4 2018 call. He said Apple had signed a multi-year partnership with Oprah Winfrey’s powerhouse.

No matter its awe factor, Apple will be entering a pretty tough space. Netflix dominates in the original content department, and it’s churning out hit after hit. Netflix’s investment in content has paid off. It now has more than 58 million subscribers in the U.S. alone, as of last quarter.

Apple, nor Netflix experienced wild price swings on news of the streaming service.

Here’s Apple’s chart.

And here’s Netflix’s.

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