The recent announcement from Netflix of splitting its streaming services and mail order DVD service is seen with anger and a mockery act by many. The experts and customers are seen saying in chorus that the company is just on the verge of its collapse and is pitted with huge amount of losses in terms of money and subscribers. However, if you call this Qwikster split a damaging thing, a company like Netflix would never allow this to happen. On the contrary, it could be true to see Netflix attempting to come up with something big by procuring some bigger company. Amazon, in its number of new products and services cater consumers a bigger cloud computing resources that is being used by Netflix in the past. Hence if Amazon looks out to buy Netflix, both groups are likely benefit a lot, which happens to be the end goal of any business in this world. Though there are few experts who do not call Netflix in peril, yet there are many reasons to merge with Amazon.
Both Amazon and Netflix will grow
With Netflix on the verge of getting merged with Amazon, it will certainly help Amazon in getting an increased amount of licensed content and thus would be able to enhance its content inventory. In this way, both will be able to better reach out to the customers than they could have done as a separate entity. Thus Netflix would be able to capitalize the market by getting a better opportunity to find new content. Hence the data being collected by both the companies could be used together to increase their sales. Further, this will also help in removing the spin-off of Qwikster, which happens to be a big deterrent factor against the merger of the two companies. In other words, it will help both of them in resolving the geographical tax issues. Hence Netflix Inc, which is not doing well in terms of customers and money, could find new life by merging with Amazon.
Amazon will bury all its physical competitors
If you look at the current status of Amazon, it has a big library of content meant for streaming, however, it is overshadowed by huge amount of media seen available to Netflix Inc via a number of its content licensing deals. Hence if Amazon is able to access the library of Netflix, it is certainly going to benefit in burying its different physical competitors. Since its competitors will not be able to cater any kind of resistance to such services by Amazon. A number of Amazon users find it dejecting to see the lack of depth inside streaming videos found over Amazon. However, this flaw could be easily removed by adding up the library from Netflix. Thus in return, Netflix could get its share from Amazon, which can help the company to get rid of its misery.
Amazon is a better capitalized business venture
Amazon by having a revenue stream of around 34.2 billion dollars (in 2010), its capital seems to be bigger than Netflix. Given the high cost involved in obtaining new content licenses especially for the bigger TV networks and movie studio players, Amazon could be called in a better position to expand the current established Netflix’s big size library. The huge amount of cash flow, which Netflix Inc would get from Amazon, would certainly help the company to go for good deals for different TV shows and movies. Right now, Netflix is not having enough of movies and TV shows till they are seen released in a DVD. However, with good amount of capital coming as a backup of Netflix, the company could be able to negotiate for better deals unlike the ones seen with Hulu. Thus Netflix would be able to stream the movies or TV shows within a week after the releasing date unlike Hulu.
The shared demographic data
With Facebook coming with its new Open Graph protocol, the internet users would be able to watch Netflix over this social networking site. The grouping of Facebook consumer and Netflix consumer data has certainly led to a couple of interesting kind of possibility. The entire social media marketing landscape is more likely to alter in the most exciting and interesting fashion as the advance hybrids and offshoots are developed after the advent of Open Graph protocol.
Amazons follows the recommendation system, which comes from the customers’ profile. The Amazon server records all the shopping habits of different buyers coming over its website. In the same manner, Netflix too has a system to record this type of data from their customers, which it uses to engage its subscribers. If both companies would combine their data, they can easily end up creating a complete profile pertaining to media consumption habits of their subscribers. In this way, it will help them to increase their consumer consumption at the end of the day.
This could be an interesting prediction from the experts which is really hard to accept by common masses. However, the above possible reasons could be behind this merger of the two companies. Netflix and Amazon could be a good combination, with both of them complementing each other in their current operations and improve themselves in their core competencies in a better way.