Question Details

Will Amazon buy Netflix?

Will Amazon buy Netflix?

Asked by: Super UserKentoine Johnson in Business » Deals
Settled on 01/02/2012 20:46 Settled by Super UserKentoine Johnson
Winning option: Amazon did not buy Netflix yet

Predictions

Background

An analyst believes he's hit upon the reason that Netflix Inc. is splitting its DVD-by-mail service from its Internet streaming service: It's setting up the online portion for Amazon.com Inc. to buy it.

Wedbush Morgan analyst Michael Pachter said he, like many others, had struggled to understand the motivation for Netflix's Solomonic separation, which was announced Monday. The DVD-by-mail service will be called Qwikster, and its billing, queue and website will be separated from the streaming service which will keep the Netflix name. Customers greeted the announcement with jeers.

Pachter argues that the streaming service would be highly valuable to Amazon and a good complement to its existing Amazon Prime service. However, buying the DVD-by-mail portion would present a problem, because it has many warehouses around the country that send out DVDs. Amazon doesn't want to have a substantial business presence in more states, because it then has to collect sales tax on sales to those states, Pachter wrote in a Thursday research note.

Netflix and Amazon didn't immediately respond to requests for comment.

Pachter raised his price target on Netflix shares from $110 to $155, a figure he said is based on a $25 value for the DVD business and a $130 per share for the streaming side.

Netflix shares rose $2.17, or 1.7 percent, to $130.67 in midday trading, as the Standard & Poor's 500 index was down 3 percent.

Other analysts have speculated that separation is a prelude to Netflix spinning off the physical DVD business. http://www.ktvu.com/news/29268014/detail.html

Find similar: Netflix, Amazon

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   Super Usergotmick

I'd buy "No" while it's still cheap. Things have changed, but I don't see any reason to settle it early. The analyst in the source article just assumed Netflix must know what they were doing. Not! I'm just glad they changed it back.

   cici

I forgot all about this. They did away with Quickster, so not separate anymore. What to do?

   Super Usergotmick

The mainstream media was brutal over this. But the bottom line, is they can't stream more than they already do because of greedy studios and exclusive contracts. Their subscription rates were dirt cheap and they know what they need to do. If Netflix ever fails, it won't be because of something they wouldn't do. And watch, as soon as the dust settles, Blockbuster will raise their prices too. But only because they can. I'm not very happy about two websites and two bills though. That sucks.

   cici

thank you, Gotmick, I've been a happy subscriber for many years too. I was so happy getting my disc's, and if a day inbetween, stream a show. I felt so pampered by them.

   Super Usergotmick

I don't think so. I can see them spinning off DVD's, but they've always said streaming is their vision. As a happy Netflix subscriber for many years, I'm kind of scratching my head though. In my eyes they've always over-delivered so it will be interesting.

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