Recently, a JP Morgan analyst named Samik Chatterjee suggested that it might be a good idea for Apple to buy Activision Blizzard. In his opinion, such a move would be beneficial for not just Apple but also Activision Blizzard, not least because the latter has run into some serious problems in recent times.
Why Did the Analyst Suggest that Apple Should Buy Activision?
For those who are curious, Chatterjee’s recommendation is based on the fact that Apple’s iPhone sales have been falling for some time, which is a huge problem because said product line is the corporation’s single most important source of revenue. Due to this, Apple has a couple of potential solutions for this particular problem. First, it can seek to bolster sales of the iPhone, thus keeping its single most important source of revenue in a flourishing state. Second, it can seek to come up with other sources of revenue, thus making it less reliant on a single product line.
In Chatterjee’s opinion, Apple buying Activision Blizzard would serve both of these purposes with a single move. First, it could strengthen the appeal of iPhones by creating more games for the iOS, thus putting it in a better position from which to hold off its competitors. Second, it could start bringing in revenue from video games as well, which are a huge market that is continuing to become more and more lucrative over time. Combined, these factors could make a buy-out of Activision Blizzard a huge boon for Apple, though this would be reliant on a successful integration process. Something that is by no means guaranteed.
Over on the Activision Blizzard’s side of things, there are reasons to believe that such a move would be beneficial as well. Currently, the corporation is under investigation for fraud, which followed upon the news that it and Bungie went be parting ways. However, it is important to mention that Activision Blizzard has been seeing falling sales as well, which has caused so much concern that the top leadership has been engaging in some serious cost-cutting as well as pressuring Blizzard Entertainment to put out new IPs that could serve as new sources of revenue. As such, an Apple buyout could do much to steady a stumbling corporation because while iPhone sales might be falling, the Apple war chest remains immense. Better still, it should be mentioned that Activision Blizzard has actually shown some interest in bringing its most famous IPs to mobile platforms, meaning that there is some potential in a partnership with Apple.
Besides Activision Blizzard, it is interesting to note that Chatterjee also brought up the idea of Apple buying out Netflix, which is another example of something that could prove to be mutually beneficial. After all, Netflix has become a leading method by which people can consume both movies and shows, meaning that it possesses incredible reach that could prove very valuable even for a tech titan such as Apple. On the other side of things, Netflix has also been spending vast sums of money to support a wide range of projects to call its own, which are necessary if it wants to be able to maintain its commanding position versus all of the media production companies that are starting up their own streaming services. Naturally, this hasn’t been cheap, which is why a Netflix with Apple’s resources behind it could prove to be very interesting indeed.
Of course, just because a JP Morgan analyst thinks that it would be a good idea for Apple to look into companies such as Activision Blizzard and Netflix, it doesn’t mean that the corporation is actually going to look in those directions. For that matter, buyouts are never as simple and straightforward as they sound. First, spending enough money can enable interested parties to buy whatever it is that they want, but that isn’t the same as saying that they can get whatever it is that they want at a price that they are willing to pay. Second, even if one corporation buys another, there are bound to be consequences rippling outwards from such important decisions. Never mind the inherent challenges of integrating new components into existing corporate structures.