Apple has a pile of nearly $ 250 billion in cash, and one of the ways that JP Morgan believes the tech girl could use is to buy Netflix, to increase Apple's position as a video content creator.
The note from Chatterjee outlines three industries that the firm believes would be a good fit for Apple to make s Trategic acquisitions and names of three companies Apple should buy: Netflix, Activision Blizzard and Sonos. This is speculation from Chatterjee, but comes as Apple's prolonged growth from the iPhone is beginning to decline. Chatterjee notes in particular that the combination of Apple Netflix is unlikely.
Apple and Netflix responded promptly to requests for comment on JP Morgan's speculation.
"We believe Apple can synergize leading positions in smartphones and fast transition of video consumption to mobile to drive stronger service growth," says Chatterjee. "We find Netflix as the best strategic fit, even though we appreciate a combination is less likely, as Netflix is probably not a seller for a modest prize. "
While Chatterjee said it would be difficult and expensive for Apple to buy Netflix, he gave three reasons why the streaming service would be the best fit for Apple. Fit Netflix with Apple's preference for being a "collector of content," he said, rather than a traditional media company like Sony Pictures. Secondly, the Netflix subscription model fits with Apple's revenue model, and third, while difficult, Netflix would be easier to obtain than Hulu and Amazon Prime.
JP Morgan believes Apple needs to buy instead of launching a streaming service on its own. 003] "Video streaming, including original video content, is a highly competitive market with established traditional media houses, and new entrants are aggressively fighting for incremental subscribers, which is likely to be difficult to scale any new platform to compete effectively," Chatterjee says. .
JP Morgan believes that a combination with Netflix can streamline Apple's advertising revenue.
"An acquisition of Netflix can help Apple drive consumers faster to their gateway app, which serves as content aggregator and multiple subscriptions, and can increase the potential for future advertising revenue," Chatterjee said.