The main news of Netflix this year is the arrival of the new affordable offer and partially financed by advertising. If it currently appears that this new subscription is struggling to seduce the crowds, it could give SVOD an opportunity to increase its long-term growth. And to manage its ad space, Netflix has partnered with Microsoft.
As noted by many media at the time, Netflix could have chosen other companies with better advertising expertise (we can think of Google). And yet it was Microsoft that was chosen. From then on, we began to believe that this partnership between the two companies could later pave the way for a takeover of Netflix by the Redmond company.
And these rumors about a possible acquisition of Netflix by Microsoft are going well so far, especially after the publication of a new article from Reuters on the subject, in which the agency discusses the situation of Microsoft, Netflix and the possible motives of Microsoft CEO Satya Nadella. If Microsoft has not currently expressed interest in buying Netflix, here are 4 reasons why this acquisition would be quite logical.
1 – Satya Nadella, a very ambitious CEO
First of all, Satya Nadella, the current CEO of Microsoft, is full of surprises. Under his leadership, Microsoft has already announced several multi-billion dollar acquisitions. We can mention the purchase of Minecraft for $2.5 billion, LinkedIn for $26 billion, the purchase of GitHub for $7.5 billion, or even the purchase of Nuance for $19.7 billion.
And currently, the Redmond company is trying to get regulators to take over Activision Blizzard for $69 billion. Essentially, Microsoft has the wherewithal to make large acquisitions. And its CEO advocates them. As a result, it’s very possible that Netflix is in the company’s sights.
2 – If the Activision takeover falls through, will Netflix be plan B?
It’s entirely possible that Microsoft will consider buying Netflix if the Activision Blizzard takeover falls through. The project is far from going like a letter in the post. Currently, Microsoft must convince US, UK and European regulators to give them the green light for the acquisition. And in the video game, of course, this project worries the competition, including Sony.
In any case, if Microsoft’s takeover of Activision Blizzard ever goes through, the company would have several billion dollars available to use to make another big acquisition like Netflix.
3 – The two companies are already very close
It should also be noted that in addition to the fact that Microsoft is Netflix’s partner for the management of its ad space, VOD also has a Microsoft executive among its board members. According to Reuters, current Microsoft chairman Brad Smith has also sat on Netflix’s board since 2015.
When it comes to products and services, the two companies could perfectly adapt to each other. In addition to movies and series, Netflix now offers access to mobile video games to its subscribers. And SVOD is interested in cloud gaming. If Microsoft bought Netflix, this could allow it to create a super subscription that combines its video games, those from Netflix, as well as the catalog of movies and series. Netflix, for its part, could need this to compete with the super subscriptions (subscriptions that don’t just give access to a streaming service) offered by Amazon or Disney.
But is Netflix for sale?
Officially no. And according to CNBC, Netflix co-CEO Reed Hastings assured in November that the partnership with Microsoft is not a precursor to a takeover. “It is not normal to enter into commercial agreements with companies that you are trying to acquire. It makes things more complicated, not less. So it was like zero motivation”he declared.
However, a takeover by a larger company could help Netflix remain the market leader. Moreover, as mentioned by the Hollywood Reporter, in June, the other co-CEO, Ted Sarandos, had not 100% ruled out the idea of a takeover of Netflix. While Netflix was in trouble (before he later returned), it had indicated that a takeover “is still a reality, so we have to keep our eyes open about it.”