An analyst believes it’s possible that Microsoft might want to acquire streaming service Netflix after Activision Blizzard shuts down.
Microsoft is currently aggressively acquiring video game studios for its Xbox subsidiary. The pace of acquisitions has slowed somewhat due to the ongoing acquisition of Activision Blizzard, in part due to the size of the publisher and the amount of international supervision involved. But one analyst believes Microsoft may have an even bigger acquisition in mind. They believe that once Activision Blizzard closes, Microsoft may consider exploring the possibility of acquiring video streaming service Netflix.
Needham senior analyst Laura Martin recently spoke to Yahoo! Finance related to a recent ad deal that she says is hiding a “hidden agenda” between the two companies. Martin explained that a new partnership between Microsoft and Netflix, with Microsoft providing ads for Netflix’s ad-supported streaming service, belies a bigger plan. She believes this is the start of a lengthy process that could lead to Microsoft acquiring Netflix.
Two key pints are brought up by Martin in her analysis of the situation. The first is that Netflix has chosen Microsoft as its advertising partner for reasons other than Microsoft being the best option. as result. In short, if Microsoft is actually a poor partner choice for what should be an important business-changing product offering, then Netflix should have a different priority when choosing Microsoft.
The second point Martin raises is that Microsoft is the only partner Netflix could have chosen that could make the acquisition at all. That’s because, even after its value drops significantly in 2022, Netflix is a very valuable company. As such, only Microsoft has the money on hand for the purchase and is able to build out the advertising technology needed for Netflix’s new service.
The amount of cash Microsoft reportedly has available as of late March 2022 is nearly $105 billion, enough to cover Netflix’s estimated $100 billion price tag even before funding. Martin’s guess that Netflix could try to lure Microsoft into a takeover is certainly financially possible. The bigger question is whether Microsoft would be interested in the possibility.
Microsoft is undeniably open to further acquisitions. For every month that it does not spend its money, that money is worth less due to inflation. But while acquiring game studios, an industry that is rapidly growing in value, has been a very lucrative investment, Netflix’s future is very unpredictable. Expanding to streaming would also raise accusations of monopolistic behavior, in a way acquiring more game studios wouldn’t. While Netflix’s partnership with Microsoft certainly raises eyebrows for several justifiable reasons, only time will tell if there’s more to it than meets the eye.
Source: Yahoo! Finance
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