Samsung wants to acquire an unspecified number of mobile
content providers to compete more effectively against Apple
(NASDAQ:
AAPL
), Amazon (NASDAQ:
AMZN
), and Google (NASDAQ:
GOOG
). While Pandora (NYSE:
P
) is likely to be mentioned in any feature speculating on which
companies Samsung should acquire, Spotify would be a much better
buy. Pandora may have more users, but Spotify has superior
licensing agreements, which are much more valuable. Samsung could
use those agreements to build the best streaming music service
ever created. (In many ways, Spotify has already accomplished
that.)
As tempting as that company may be, however, there are others
that Samsung should examine first if it is serious about becoming
a leader in mobile content.
Netflix
Hulu is unlikely to sell, and YouTube is owned by Google,
which is too big to buy. That leaves only one streaming video
leader for Samsung to acquire: Netflix (NASDAQ:
NFLX
). With a market cap just over $3 billion, Netflix could provide
Samsung with immediate (and exclusive) access to a wide variety
of films and TV shows. Not even Amazon Prime, which announced
more content deals
than any other video service this year, can compare.
While some consider Netflix to be an
overvalued company
, the firm still offers the go-to service for streaming movies.
It also provides consumers with a DVD option, something that
Amazon and Hulu do not currently offer. The only other streaming
video service that will offer DVDs is the untitled service from
Verizon (NYSE:
VZ
) and Coinstar (NASDAQ:
CSTR
).
Netflix would also be a good buy for Samsung if it is
interested in targeting families with young children, as it is
the only video service that signed a
multi-year contract
with DreamWorks Animation (NYSE:
DWA
).
Electronic Arts
No one wants to buy a giant game publisher right now. With
game sales slumping, developers scrambling, and console
manufacturers dragging their feet, Electronic Arts (NASDAQ:
EA
) does not appear to be an attractive company.
Samsung did not say it wanted an "attractive" firm,
however.
"The message we're getting from the top is to raise software
capability, and buy rather than build, if needed," Kang Tae-jin,
a senior VP at Samsung's Media Solution Center, told
Reuters
. "Our focus on software is primarily aimed at driving hardware
sales, rather than making money. We have a full range of handsets
in so many countries, and, to better market our products, we
thought it's better to start our own software business."
By acquiring Electronic Arts, Samsung would gain control of
Madden NFL, FIFA, and Battlefield -- three of the strongest video
game brands in the world. Samsung could leverage their popularity
to make the upcoming Galaxy S IV the number-one device for mobile
gaming.
IAC/InterActiveCorp
From Ask.com and About.com to Vimeo, College Humor, and
Urbanspoon, IAC/InterActiveCorp (NASDAQ:
IACI
) has made a business out of launching and investing in
successful Web properties. They may not all be content providers,
but they have helped IAC/InterActiveCorp transform into a
multi-billion-dollar enterprise.
Samsung could use these businesses to continuously direct
consumers to their mobile screens. By controlling some of the
content that Galaxy Note II users want, for example, Samsung
could strengthen its hardware business. It may also be able to
use IAC/InterActiveCorp to launch an ad platform, which could be
critical to the company's future.
Follow me
@LouisBedigianBZ
(c) 2012 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.