Verizon May Be Pondering Netflix Purchase
December 13, 2011 9:19 AM
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Verizon is reportedly thinking about purchasing Netflix in an effort to make its way into the video streaming/DVD rental business and to give Netflix a boost as well
Just last week, reports indicated that
Verizon was preparing to launch a video streaming service
that would rival the likes of Netflix and traditional cable TV. However, according to
, Verizon is reportedly thinking about purchasing Netflix in an effort to make its way into the video streaming/DVD rental business and to give Netflix a boost as well.
While Verizon has a large user base with its internet, phone, data and wireless services, it would have had to come up with a unique video streaming service that challenged already-established Netflix as far as content and subscription prices. This wouldn’t be an easy task, and taking hold of Netflix would give it an automatic 23 million customers.
The deal could be advantageous for Netflix as well, since it has been struggling this year after
raising prices and changing plans
back in July. From there, the once unstoppable video giant continued ticking off customers with antics such as the loss of Starz content after the premium subscription channel refused to renew its distribution deal,
launching a DVD spinoff business called Qwikster
requiring a completely separate account, and then
changing its mind about the Qwikster idea
So far this year, Netflix stock has fallen 57 percent. Just last month, it announced
a bleak 2012 outlook
and its shares dropped to their lowest point since March 2010.
Despite the potential advantages that most reports are pointing out, the potential disadvantages could likely outweigh any benefits listed above. For instance, Verizon could get greedy and decide to limit the Netflix service to Verizon customers only. Also, Netflix has been known for its rebellion against traditional cable TV by offering its own business model with cheaper monthly services and a growing amount of content. If Netflix were to fall under Verizon's thumb, this likely wouldn't be the case anymore.
According to Porter Bibb, managing partner at Mediatech Capital, Verizon may partake in a "bidding war" for Netflix that could end in a $4.6 billion purchase by Easter 2012. However, neither Verizon nor Netflix have confirmed the rumor.
jumped 6.2 percent to $75.26 after the announcement Monday.
This article is over a month old, voting and posting comments is disabled
12/13/2011 10:17:59 AM
Verizon <> Verizon Wireless
Verizon owns about half of Verizon Wireless, but they are run seperately and very differently.
12/13/2011 10:43:25 AM
Verizon owns about half of Verizon Wireless
Which side of that "about half" you are on makes a HUGE difference. Verizon owns a controlling interest Verizon Wireless. Plus, there's been talk lately about how Verizon is scaling back it's FiOS and hardline business in general in order to focus more on the wireless side of things.
12/13/2011 11:28:47 AM
By half, you mean one half has reached the maximum they can rip people off, and the other half has room to milk more money out of their customers?
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