Ranked third on Fortune 500’s list of top-earning companies, Apple continues to dominate the tech industry. In fact, its flagship smartphone, the iPhone, was the hottest selling product in 2017. While there’s no signs of Apple discontinuing its smartphone, new reports suggest the Cupertino-based company may purchase the streaming TV and movie provider Netflix.
Originally founded in 1997 as a mail-based DVD rental program, Netflix has since redefined its image as the world’s leading streaming content provider. According to Statista, more than 109 million people had an active Netflix subscription as of Q3 2017. With the company’s “middle plan” costing $10.99 per month, it’s easy to see why Netflix is such a profitable and successful company.
But Netflix’s business model may soon change. As revealed by Business Insider, Citi analysts say there’s about a 40 percent change of Apple buying the streaming content provider, citing President Trump’s recently passed tax cuts for corporations as the driving force for this acquisition. According to the analysts, Apple can repatriate up to $220 billion under the new tax laws. This money is currently being stored overseas, but Apple will have an opportunity to move the cash back to the United States without suffering extensive tax penalties.
So, why exactly do analysts think that Apple will buy Netflix instead of some other profitable company? Well, Apple has tried to enter the streaming TV and movie services market with minimal success. Users can download on-demand movies and shows from the company’s iTunes portal. Unfortunately for Apple, most users still prefer traditional streaming content apps like Hulu and Netflix.
Furthermore, Apple has reportedly invested $1 billion in producing unique video content, which the Wall Street Journal says could yield up to 10 new shows. Even if produces this content, though, it still needs a platform on which to host and distribute it. Apple may use iTunes to sell the new content, but another possibility is that it uses Netflix or a completely new platform.
If Apple purchases Netflix, it would certainly help to establish the company’s image as a leading provider of streaming TV and movie services. Of course, Apple hasn’t announced plans to acquire Netflix, and until that happens, this is based purely on speculation.