Apple’s Next Step: A Stronger Challenge to Netflix?

Analyst Jeffrey Misek thinks the company will use cloud services to go after Netflix

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Could Apple be preparing to transform the way we watch TV? Jeffries analyst Peter Misek thinks so. He claims in a report that Apple is on the cusp of launching another “assault on the living room,” this time in the form of “a new far reaching cloud-based” video service similar to Netflix.

After having revolutionized computers, phones, and music, this could be the next logical move in Apple’s trajectory. (Apple released Apple TV, a web-based TV device, back in 2007 but it hasn’t caught on in a big way.) “We are huge fans of iTunes,” Misek said, “but that cannot be it from Apple. There is another level coming here and we see this as one of the most fruitful potential uses of Apple’s enormous cash hoard.”

Misek pointed to Apple’s huge new data center in North Carolina as the main evidence to support his theory. He believes that given the center’s massive size, it’s likely that it will be used to store video content, since music takes up very little space.

He also cited the recent sparring between cable companies and content providers: "We find it notable that the content companies, citing a lack of domain license, asked Cablevision to remove channels from its iPad app," he wrote. "We believe these same companies are negotiating some sort of deal with Apple." But negotiations with providers will likely be complicated, which means that Apple won’t be able to release its service until 2012 or 2013.

While content providers could reap the benefits of an Apple video service, the news wouldn’t be as good for cable companies and wireless providers. Not only could the large amounts of streaming video put a major strain on their bandwidth consumption, but the Apple service would also provide one more reason for people to cut the cord on their cable TVs.

With rumors swirling that the Apple CEO might be stepping down in the near future, Misek “can't see Steve Jobs turning his reign over on a flat note.” What better final act for Jobs than to revolutionize video?

@adweekemma Emma Bazilian is Adweek's features editor.