But rather than duke it out with Netflix, Apple's smart move would be to pay $12 billion to acquire its partner and rival, said Brian Marshall of Gleacher & Co.

Last week, Apple said sales of the new Apple TV, a $99 device that streams purchased, rented and free content to television sets, had passed the 1 million milestone. in early September.

In a note to clients on Wednesday, Marshall pegged Apple iTunes' TV and movie rental business at about 10% the size of Netflix's.

"Despite iTunes' TV/movie availability being only half as old as Netflix's service, it is our belief that iTunes' rental business is already roughly one-tenth the size of Netflix," Marshall said in the note. By his estimates, Apple rents about 475,000 TV shows and movies daily, while Netflix handles 5.1 million rentals each day, split almost evenly between DVD rentals and instant viewing via streaming.

Netflix kicked off its rental service in 1999; Apple launched iTunes rentals in 2005.