Amazon.com is rumored to be considering an acquisition of Netflix. Yesterday, Netflix share prices gained $1.06 (5%) to $22.45.
Netflix’s shares have been struggling due to the intensity of rivalry from other mail movie distributors such as Blockbuster. Brian Bolan, a Jackson Securities analyst, heard about the speculation of the buyout from industry contacts.
In regards to Amazon, Bolan said “They’ve got excess currency, if you will. Netflix, on the other hand, has been facing stiff competition from Blockbuster and everyone else, so they’ve seen their stock go lower.”
From a business operations point-of-view, the potential synergy between Netflix and Amazon.com makes total sense. Amazon has an online video streaming service called Unbox and Netflix has a similar service called Instant Movies Online. If Amazon.com were to acquire Netflix, they would gain Netflix’s subscribers and add be able to add more to the movie inventory.
The founder of Netflix is Reed Hastings and he serves on the Board for Microsoft as well. Jeff Bezos also interacts with Microsoft often as his company, Amazon.com is based in Seattle, Washington.
As more information arrives about the potential acquisition, Pulse 2.0 will write about it. Keep checking back often.
