“For every action there is an equal and opposite reaction,” according to popular science guy, Sir Isaac Newton. (If physics are your thing). When the Disney-Fox deal was announced late last year, speculation ran rampant regarding projects started and killed, jobs created and lost, power centralized and maximized. In other words, no one really knew what to expect, but many more actions and reactions are certainly to be expected.
And if Hollywood’s waters weren’t already murky enough, toss the U.S. government into the mix and shake vigorously. The Department of Justice is already boxing ears at Time Warner and AT&T, as their merger remains dubious (possibly signaling rough seas ahead for Disney and Fox). Adding complexity to confusion, the new tax bill just became reality, and big U.S. corporations, like Apple, are now in a position to unabashedly claw back some of the mountains of cash they’ve long-stashed overseas.
Since I mentioned Apple, let’s consider their position in all of this mayhem. Apple is suddenly struggling to keep pace with the Facebooks, Twitters, and Googles of Silicon Valley (the iPhone X isn’t selling like expected, and let’s be honest, iTunes is precisely no one’s favorite digital service). Apple TV isn’t exactly dominating against the likes of Chromecast, Roku, or Firestick either. So, what’s a tech innovator to do when it’s losing its edge in innovation?
After all, content is king, and Apple isn’t exactly known for its content.
According to Business Insider, Citi analysts believe there’s a 40 percent chance Apple acquires Netflix (they’ve got around $220 billion in reserve, and Netflix is worth about one third of that). A Netflix acquisition makes sense for Apple; whether it’s good for consumers or the entertainment industry is another topic altogether. Apple has the cash, Netflix has the content, love is in the air.
There are obviously other ways for Apple to invest in content, but Netflix is a really smart, forward-thinking option. For example, it makes no sense for Apple to purchase a TV or movie studio (the past) when streaming services (the future) are only growing in prominence and acceptance.
Streaming services are so in vogue that every major studio and Hollywood entity is building one or owns one already. Disney owns a major chunk of Hulu (60 percent after the Fox deal closes) and they’re debuting their own streaming service in 2019; Amazon is investing heavily in their original content and live TV divisions; Netflix has the early edge in original content but lacks live TV functionality, plus they’re drowning in debt and spending well in excess of their subscription revenues — at some point this catches up to them.
Apple could certainly make a statement in this arena by rolling their own streaming service, like Disney, but it’s more expedient to simply acquire the expertise and hit the ground running via acquisition. Netflix would also clearly benefit from the air cover provided by Apple’s incredibly deep pockets.
Does it seem like these companies are suddenly so cash rich that money is hardly the determining factor in their decision-making?
Continuing the theme of knock-on effects, if Apple acquires Netflix, how does Microsoft respond? Does Google take this lying down or do they go after Sling TV or Roku? Where does Facebook fit into this craziness (if at all)? As I said in my opening, no one knows where we’re headed, but it’s pretty clear that more changes are coming to Hollywood, they’re coming fast, and the players are so flush with cash that it’s impossible to predict where we end up.