Question

Strategic Management

Should Apple Buy Netflix? in the context Why are the Same Assets More Valuable to Another?

Answer 1

Some of the reasons why Apple should buy Netflix, such as, financially Apple is strong enough to acquire Netflix, Apple’s service revenue would flung to higher levels (as presently Apple is more into hardware sales and having “subscription based business” would help Apple to grow), higher growth prospects for Apple (due to its robust marketing) as Netflix has a wider pool of subscribers globally, by moving Netflix subscriptions to Apple’s iPhone or iPad would boost share price and expertise in digital services would be value add to Apple. Whereas, some of the reasons why Apple should not buy Netflix are, such as, it may end up in expensive acquisition, Apple’s core competencies lies in making an innovative product which may not work when buying other’s product, risk of diluting Apple’s earnings and may cost more to the company when paying interest, may have issues in licensing or subscription offering with respect to other player in the market (e.g. Amazon’s Prime Video), etc. Overall, by having Netflix with Apple, it will be easy to leverage Apple’s assets and focus towards the betterment of the business in long term and compelling growth, and Apple carries strong business model.