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Netflix, Inc. (NFLX) Using Apple Inc. (AAPL) For Game-Changing Service Test, Not Facebook Inc (FB)

Apple Inc. (NASDAQ:AAPL) is still a key innovator in the tech world, and Netflix, Inc. (NASDAQ:NFLX) is obviously known as an innovator in the video space, but even you may be surprised by what you’re about to read. With only a handful of real competitors and even a smaller number of companies that truly keep Reed Hastings awake at night, Netflix is at the top of its respective industry, but who would’ve thought that its latest move would be with Apple itself?
Reed Hastings and Tim Cook
This news is flying very, very low under the radar, but according to Gigaom, Netflix’s much-anticipated personalized profile system is using Apple TV users as guinea pigs. The profile system, which allows individual members of a family (or account) to manage their own home screen and personalized recommendations, is a logical step in Netflix, Inc. (NASDAQ:NFLX)’s development.
For starters, remember when Wedbush Securities analyst Michael Pachter noted that “as many as 10 million people are watching the online video service without paying,” via Bloomberg?
Considering the fact that Netflix has 27.1 million estimated users in the U.S. alone, this is a significant chunk of lost revenue for a company that is relying on heavy signup growth to offset the high costs of original content production of shows like “House of Cards” and “Orange is the New Black.”
Now, the connection with Apple Inc. (NASDAQ:AAPL) is a surprise because Netflix already linked their account system with Facebook Inc (NASDAQ:FB) earlier this year, allowing users to share what they’re watching with friends. One would logically assume that the next step would be for Netflix to simply allow (or mandate) individual users of a joint account to sign-in with their own Facebook profiles, effectively splitting an account, giving users their own queues and viewing histories.
If reports from rumor-site MacRumors are true, Netflix is forgoing the social eccentricities that Facebook provides for an Apple Inc. (NASDAQ:AAPL) exclusive test instead. A report from the site has recently said that each Netflix user can create their own account (complete with an avatar) within their system. Furthermore, this will likely be launched to the masses in August, and Apple TV users reportedly have the ability to create their own Netflix-local profiles one month early.
In a way, the Netflix, Inc. (NASDAQ:NFLX) profile system reminds us of Microsoft Corporation (NASDAQ:MSFT)‘s Xbox Live format, if only because of the unique avatar associated with each user, and the fact that it might not be very Facebook Inc (NASDAQ:FB) friendly.
Of course, Facebook could very well have a prominent role in Netflix’s new rollout, or at the very least maintain its current positioning as the ‘watch and share’ function on the streaming video platform.
All of this aside, the main question one must ask–if these reports are true–is why Apple Inc. (NASDAQ:AAPL)?
It’s no secret that everyone from Gene Munster to Brian White expect a standalone Apple TV within the next year or two, and while it may not seem like a big deal that Netflix, Inc. (NASDAQ:NFLX) is using the company’s set-top box to test its new service, it still undoubtedly has Apple bulls itching for more.
Even so, this latest Netflix-Apple connection is too curious to ignore, and we’re just throwing it out there, but Apple has enough cash to buy Netflix ten times over. Heck, even Jim Cramer thought that a purchase of the video streaming site might not be a bad idea for Cupertino. Check out his thoughts (dated, but still relevant) below.

Interested in more? Then check out hedge fund managers Carl Icahn and John Griffin‘s equity portfolios to see where Netflix sits.

Disclosure: none

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