Netflix, Inc. (NFLX): The Company’s Need Is Apple Inc. (AAPL)’s Opportunity

Reed Hastings wants Netflix, Inc. (NASDAQ:NFLX) investing in more original series. And why not? House of Cards is already a success, and early signs point to a similarly strong showing for the horror series Hemlock Grove.

Trouble is, this sort of content doesn’t come cheap. In a manifesto posted to Netflix, Inc. (NASDAQ:NFLX)’s investor-relations site recently, Hastings confessed that original program development is “cash-intensive” and that producing more shows is likely to mean raising money from investors or partners:

As we expand Originals, they will consume cash. Since we are otherwise using domestic profits to fund international markets, we will raise capital as needed to fund the growth of Originals.

And that, Fool, is where Apple Inc. (NASDAQ:AAPL) comes in. The Mac maker should be investing in Netflix, Inc. (NASDAQ:NFLX) original programming.

Source: Netflix.

How about an iPad with that?
It’s a rich opportunity. Netflix, Inc. (NASDAQ:NFLX)’s bulkier content portfolio led to hefty profits in Q1. Revenue rose 17.7% to $1.02 billion as the company turned an $0.08 per share loss into a $0.31 per share profit, after accounting for charges related to paying off debt. Wall Street was expecting just $0.18 a share. The stock promptly soared 20% on the news.

Why should Apple Inc. (NASDAQ:AAPL) care? Math. Better TV apps means a better TV experience on the iPad, which means more reasons to buy an iPad, which means more iPad sales.

Or at least that’s how the market seems to be trending: iPad unit sales soared 65% and came in almost 1.5 million ahead of consensus estimates in fiscal Q2 versus a 7% year-over-year increase in iPhone sales. IDC is right — tablets are becoming an everyday item for American consumers, none more so than the iPad.

A natural partner
Apple Inc. (NASDAQ:AAPL) and Netflix, Inc. (NASDAQ:NFLX) also share competitors. Consider Amazon.com, Inc. (NASDAQ:AMZN) and Google Inc (NASDAQ:GOOG). Each sells individual tracks as iTunes does. They also offer music, books, and magazines in addition to streaming. Apple Inc. (NASDAQ:AAPL) mutes their stores on its devices for this very reason.

Hulu isn’t a competitor, but management uncertainty makes partnering a risk. Redbox Instant would be an alternative as a development partner if executives had any interest in original programming. So far, they don’t.

Which brings us back to Netflix, Inc. (NASDAQ:NFLX). Hastings needs Apple Inc. (NASDAQ:AAPL)’s cash, and CEO Tim Cook has demonstrated a willingness to invest in ways the late Steve Jobs never would. Listen to how CFO Peter Oppenheimer described the company’s cash strategy in announcing fiscal Q2 earnings.