Hot on the heels of the rumor that Microsoft (NASDAQ:
MSFT
) is
still interested in acquiring
Netflix (NASDAQ:
NFLX
), Amazon (NASDAQ:
AMZN
) is thought to be interested in buying the streaming video
giant. This is not the first time this rumor has surfaced. Amazon
has been interested in Netflix for more than a year (or so the
rumors
claim). But even at its peak, the company had very little to
offer Amazon. Today, Netflix has even less.
Netflix is no longer a leader of online content. The company
uses its official blog to promote its most recent TV show
additions, which are limited to
Freaks and Geeks
,
Undeclared
and the fourth season of
Sons of Anarchy
. While the first was a critical hit and the last is somewhat of
a success story for cable network FX, neither
Freaks and Geeks
nor
Sons of Anarchy
have what it takes to bring in the masses. Few people have heard
of
Undeclared
, so it will unlikely have a significant impact on Netflix's
bottom line.
These are not the kinds of content deals that will make
Netflix attractive to Amazon. Regardless, some financial
professionals believe that if a
famed hedge fund manager like Carl Icahn
is interested in turning Netflix into an acquisition candidate,
Amazon will come running.
Two years ago, Netflix might have been a nice firm to grab. At
that time, Netflix could have provided Amazon with content from
Sony (NYSE:
SNE
), Disney (NYSE:
DIS
) and other major corporations, but that is no longer the
case.
Meanwhile, Amazon Prime has signed a
large number
of its own
epic deals
-- including one with EPIX -- giving the service a variety of
popular films.
Amazon has worked hard to build up its content library by
acquiring its own content deals. It has not even hinted at the
idea of obtaining content through an acquisition, which would be
the primary benefit of a Netflix merger. Amazon would also gain
millions of additional subscribers, but unless the company can
find a way to convert them into Prime subscribers, the online
retailer would not get what it wants.
When Amazon started its Prime instant video service, the
primary goal was to expand its customer base for Amazon.com. The
free two-day shipping that comes with Prime subscriptions is
actually used
more frequently
than the Free Super Saving Shipping option that is available to
all customers. This means that Prime customers are buying a
ton
of items from Amazon.
The Kindle Fire tablets were designed to accomplish the same
thing -- to persuade customers to return to Amazon and spend more
money. That strategy
seems to be working
.
If Amazon was interested in renting physical goods, Netflix
might be a valuable acquisition. If it could somehow use DVDs to
steer consumers toward Amazon.com, the company would be a
promising option. But Amazon does not need Netflix to fulfill any
of its goals -- it is doing that all on its own.
Netflix is better suited for a company that needs content
(such as Microsoft) and/or subscribers (such as Hulu). In
October, Netflix announced that it had acquired
30 million streaming subscribers
worldwide. At the same time the company announced
weak 4Q guidance
.
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@LouisBedigianBZ
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