Why Apple-Netflix Deal Hinges On Much More Than Just Strategic Fit

Among the world’s most high-profile technology deals in recent times, Apple’s rumoured acquisition of Netflix is regarded as the “best strategic fit” for the company in its content business, as J.P. Morgan analyst Samik Chatterjee wrote earlier this month, according to Bloomberg.

Of course, it has to be since Apple already has significant experience in the content business. Its co-founder Steve Jobs helped animation company Pixar to turn around its business into a great success, Enrique Dans, senior advisor for innovation and digital transformation at Spain’s IE University said in a column on Forbes.

In fact, Apple’s own content business is of significant size – valued at around twice of Netflix, and has not given up with the not-very-successful Apple TV, said Dans.

However, Apple’s intent to multiply growth for its content business by acquiring Netflix, if at all it happens and that too successfully, will be driven less by the business potential. What it would largely rest on is culture or cultural fine-tuning.

“Apple will buy Netflix will undoubtedly depend more on this kind of fine-tuning than on strategic considerations that, without a doubt, fit perfectly into Apple’s agenda,” said Dans.

Strong corporate culture – one of the factors for Netflix’s huge success, said Dans, is based on trust and open information.

This culture, according to Netflix’s CEO Reed Hastings, is anti-Apple.

“We’re like the anti-Apple. They compartmentalize, we do the opposite,” Hastings had said in April last year at a TED conference in Canada.

The cultural misalignment along with “Hastings ‘pride and personality’ would be another obstacle to a possible acquisition, which could lead to a hostile takeover, with all that entails, followed by a difficult post-acquisition phase,” said Dans.

Nonetheless, Apple in such circumstances might build its own Netflix or simply go with acquisitions for its existing and future services, for instance digital magazine subscription service Texture, which it acquired in March last year.

Apple might launch its video streaming service in April or early May, among many subscription services that its CEO Tim Cook confirmed Apple is working on, CNBC reported last week.

Wedbush managing director of equity research Daniel Ives last week on CNBC’s Squawk Box Europe said that Apple’s biggest mistake under Cook is not buying Netflix. – Financial Express