A simple collaboration or a strategic partnership signalling more down the road?
Needham senior analyst Laura Martin was speaking to Yahoo Finance Live on Thursday, discussing the streaming service has enlisted the help of Microsoft to deliver their new ad-based subscription tier announced earlier this month.
The new Netflix tier offers users a cheaper monthly fee if they are willing to sit through adverts, however, Martin believes that the relationship with their new tech, sales and advertising partner possibly hints toward a “hidden agenda”.
Suggesting that Netflix could be “looking for an exit” – their financial troubles have been no secret over recent months – Martin believes that they might be making a long-term play to be acquired by Microsoft, or vice versa.
Microsoft have been making moves all year
Microsoft have already made one huge acquisition this year, having snapped up Activision Blizzard for a whopping $70 billion back in January; in fact, the arm actually providing the new Netlfix ads, Xandr (previously owned by AT&T), was only recently acquired by Microsoft in June.
Martin suggested that “Netflix is trying to get closer to Microsoft in hopes that, after Microsoft digests its Activision acquisition, it turns and buys Netflix next,” adding that the choice to partner with one of the few companies who have the funds to make the $100 billion purchase were it ever to happen is telling – i.e. Microsoft could buy Netflix with relatively few regulatory issues.
Both Martin and Goldman Sachs analyst Eric Sheridan also questioned the timing of the move, with the latter detailing how the service is battling both “post-pandemic growth normalisation” and the “consumer recession” still lingering.
Martin also went on to explain how months on from the earnings call which announced the new tier, “[Netflix] still haven’t hired a head of ad sales… The notion that you have no one in the empire that’s an expert in advertising, and yet they’ve picked an ad partner for the technology stack is backwards.”
Were this potential move ever to become more than a hypothetical, it would be equally massive than the Activision deal, if not even more so, with more than 222 million Netflix subscribers around the world.
- Bill Gates promises to drop off world’s rich list for our sake
- Warren Buffett bought $1bn stake in Activision just weeks before Microsoft buy out
- Twitter officially sue Elon Musk to force him into buying platform