Business model innovation — why Netflix should acquire or merge with Spotify?

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Sanjeev Arora

4 min readNov 1, 2019

Based on the current market landscape and the upcoming competition in 2019–2020 from various media companies (see below) and with the launch of Apple TV+ today, Disney+ on 12th Nov’19 and HBO Max in May 2020, I believe executives from both Netflix and Spotify are already behind in making a crucial decision that can help protect their market position as well as grow customer retention.

To stave off competition, Netflix must make an attempt to “acquire or merge” with Spotify.

Here are some of the key reasons why a single subscription of Netflix with Spotify will be valuable and why it is also the right step towards business model innovation at Netflix -

Market leaders must join forces — Netflix and Spotify, both hold a leading position in the market with mature technology platforms (video & audio streaming). They continue to lead in various markets due to the deep understanding of their customer behaviour.
International presence — Netflix and Spotify, both have successfully entered international markets like Asia and Latin America to grow their customer base. In these markets, they offer more original content in their national (or local) languages with top artists than any other international provider (Apple, Google).
Understanding markets — Netflix and Spotify have continued to grow in international markets by strategically investing in local marketing, low-cost subscription plans and establishing key partnerships (Government, Media, Celebrities) to fight strong local competitors. Read more here, Netflix — subscription in India, subscription in Malaysia and Spotify — student subscription in Singapore
There is still time — Netflix has one of the largest collections of original content in the market and it will take other players some time to catch up on the original content. For more, listen to Lucas Shaw on the 2020 streaming wars in this Bloomberg Businessweek episode.
Do what Apple can — Netflix can offer similar services to its customers like Apple (TV+ & music) by acquiring Spotify (more content — video, music, podcasts). Spotify is an ideal audio streaming provider for Netflix customers as it recently strengthened its market position with original podcast content by acquiring Gimlet and Anchor. For more on Spotify acquisition, click here.
Loss of popular content — Netflix may see some customer churn as it will lose many popular shows, movies from its platform as soon as Disney+ and HBO Max launches in the market. Read more on content issues here.
It’s like 1+1 = 2 — It will be harder individually for both Netflix and Spotify to protect their customer base in both local and international markets from Apple TV+ with a free 1-year subscription (video, possibly music) with the purchase of apple devices, Amazon’s prime video already bundled with prime subscription and multiple original content providers like HBO Max and Disney+

I’m sure there are more reasons that you might come up with (let me know in comments) but for now, I wish that someone from Netflix or Spotify ends up reading this article as a matter of urgency.

Additional information below —

Some of the key streaming service players in the market —