Rumors of a potential acquisition involving Netflix and Microsoft are picking up steam, and the supporting data behind these speculations suggest that it might not be just hearsay.
Surely Netflix is among the giants when it comes to profits, right?
Indeed, there was a period when Netflix’s subscription numbers skyrocketed, particularly during the Covid-19 pandemic. The streaming giant seized the opportunity, releasing a plethora of new content for the increased number of viewers stuck at home. That era saw an unprecedented global binge-watching spree of Netflix’s original content.
However, the tide has taken a drastic turn, and Netflix had to confront an unexpected downturn last year, marking its first considerable loss of subscribers in a decade.
Based on several predictive analyses, Netflix is bracing itself for further subscriber losses in the near future, with reasons stemming from today’s uncertain market conditions. This prediction has stirred up quite the storm within its investor circle, compelling Netflix to explore new lifelines to stabilize its financial situation.
Could Netflix really be on the market for acquisition?
What was once dismissed as mere speculation is now a topic of genuine consideration. There was a time when Netflix was an undeniable bull in the stock market. Currently, Netflix is making a fierce push to stem its losses, which seem to be mounting by the day. With financial reserves dwindling, the concept of being scooped up by a deep-pocketed investor or tech titan is starting to look more like a strategic move to recuperate.
A potential acquisition of Netflix by Microsoft could lead to significant shifts within the entertainment sector. (Image Courtesy: Forbes)
Why is Microsoft seen as a likely suitor?
A buyout of Netflix’s scale would easily exceed $100 billion, narrowing the field of possible players. Microsoft, which recently partnered with Netflix on a new advertisement-backed subscription tier, boasts a cash reserve of $105 billion, lending credence to the acquisition whispers.
The intensifying speculation is further bolstered by Microsoft’s recent shopping spree, where it has snapped up 19 companies since January 2021, including the monumental acquisition of Activision-Blizzard for $69 billion.
Laura Martin, a senior analyst at Needham, intimates that Netflix may very well be angling for a merger, hoping that once Microsoft has fully integrated its latest gaming industry acquisition, it might set its sights on Netflix next. A scenario which, if played out, would notably redefine competition and strategies within the entertainment sphere. It remains to be seen whether this speculative mega-deal will come to fruition, closely mirroring a plot twist you might find in a Netflix drama series.
