Netflix share prices rose by over 13% on Friday following a rumor which suggested that Microsoft was about to make a bid for the streaming video service. The rumor first started when Netflix CEO Reed Hastings decided to step down from Microsoft’s Board of Directors, which led us to believe he made this decision to avoid a conflict of interest.
There could be several reasons for Hastings stepping down from his post, but nevertheless it fed into the possibilities of the buyout. Netflix shares have continued to drop over the last year by more than 50%, making the company a target for potential buyers. With a market cap of 3.7 billion, Netflix is an affordable buy for Microsoft who has a large $66 billion cash pile at their disposal. While Microsoft continues to improve their services on Xbox and Windows 8, such a purchase could also keep a rival company from benefiting from Netflix’ technologies.
Do you think Microsoft should invest in Netflix to compete with Apple’s iTunes and Google’s YouTube? Will the Netflix brand help them win over an audience that their Xbox brand cannot?
We disagree and think that Microsoft’s introduction of Xbox Music and Xbox Video will be enough to compete in movie and television offerings on the platform.