Mergers That Could Dethrone Amazon: Netflix (NFLX) and Facebook (FB)
It has been suggested before but merits repeating now: Netflix, Inc. (NASDAQ:NFLX) is going to struggle to make any money because it’s selling video content, of which there’s a plethora available elsewhere. Some of that other digital video content is cheaper than Netflix too, if not free.
The trick is leveraging that content as a marketing tool, just as Amazon has. Prime members gain access to Amazon’s library of digital content, and once a consumer is in the Prime fold, it becomes infinitely easier to induce them to make a purchase.
In other words, Netflix doesn’t sell anything other than access to video, but the real value to video is using it to draw a crowd, then monetize them in other ways.
Enter, Facebook Inc (NASDAQ:FB), a company that’s starting a more serious video effort. It recently inked deals with Vox Media and BuzzFeed to create several half-hour shows to be aired online. If that goes over, it would only make sense for Facebook to up the ante. It could try to do so on its own, or it could just buy the most proven name in the business.
The kicker: Facebook has a lot more dedicated users than Netflix has subscribers, and could easily convert a bunch of them into paying video customers. Netflix has to fight tooth and nail to garner its new members.
It seems like a crazy buyout idea at first, but a Facebook/Netflix combo could serve as a very potent distraction, keeping shoppers’ minds off of Amazon altogether.