How Apple can take on Netflix

(Yahoo Finance) – Apple’s fiscal fourth quarter earnings (AAPL) showed strong demand for some of its hardware — but when it comes to services like Apple TV+, it’s practically giving away content when it needs to do a better job of building it up.

Wedbush analyst Dan Ives told Yahoo Finance on Friday that the tech giant is still offering up for free most of the content on its nascent streaming service.

Meanwhile, Apple is sitting on about $192 billion in cash, which Ives thinks is enough to acquire a company producing lots of content in order to compete with industry leader Netflix (NFLX), which announced a price hike this week.

“They are the king of content,” Ives said. “If you look at churn it’s really been impressive what they’ve been able to do” in the face of stiff competition from the likes of Apple, Disney (DIS) and Amazon.

“I think Netflix continues to be in a position of strength there and them putting together that price increase, it’s what investors want to see,” Ives added.

‘Building a Mansion with No Furniture’

For more than a year, the analyst has been beating the drum for Apple to use its cash to buy a studio with a full slate of movies and shows.

“That continues to be the missing piece,” Ives explained. “They’ve essentially built a castle, a mansion with no furniture in terms of content.”

Apple TV+’s relatively slim catalog includes originals like “The Morning Show,” “Ghostwriter,” “Fraggle Rock: Rock On!,” and “Oprah’s Book Club” — six of which earned over a dozen Primetime Emmy nominations. However, those accomplishments have fallen short of the accolades and broader popularity of content on other platforms.

“I would be shocked if they do not buy a studio over the next three, six months,” Ives told Yahoo Finance, speculating that major studios like Lion’s Gate, Sony, MGM and A24 were prime contenders to be bought out.

“From a content perspective, that’s what’s missing for Apple on the streaming side,” added Ives — and would likely make investors happy.

Tracey Marx Bernstein is a Senior Producer at Yahoo! Finance.