Monday, October 29, 2012

Is Microsoft Buying Netflix?

With the release of their tablet, Surface, Microsoft may feel the need to have a content strategy, too.  For Apple, it is all about iTunes; for Microsoft, the rumor is that they are thinking of acquiring Netflix.  "Meanwhile, buying Netflix would be in keeping with Microsoft’s revamped philosophy on the Xbox 360, which treats the device more like an entertainment device and less like a video game console."  How Microsoft can use this for their competitive advantage remains to be seen.  Netflix has had a difficult time growing its streaming business while its DVD business drops.  That Microsoft can bring something new to Netflix is a big question mark. Netflix plays more like an agnostic player while Microsoft needs a content partner that can specifically make its own devices look and act superior.  My guess is that this is all rumor and not a strategic possibility.

1 comment:

  1. If they simply want to compete with iTunes, the XBox movies and music services will do that. Netflix allows them to compete with Amazon. But you need to think about the value propositions Netflix might play into...

    XBox movies + XBox music: Competes with Amazon, iTunes, Google Play

    Add on Netflix: Compete with Amazon

    Add on Skype: Compete with Google Voice

    Add on Office 365: Compete with Google Docs

    Add on Sky Drive: Compete with Google Drive, .mac,

    Add on Compete with .mac, Gmail

    Microsoft has the pieces in place to counter all the services their main competitors offer. The only missing piece is free streaming video, which Netflix could offer.

    Imagine they keep the Netflix service at $8.99 a month, then offer MSNetFlix Plus at $19.99 a month. That includes XBox movies with one free premium movie per month, XBox music pass with unlimited free streaming music.

    MSNetFlix Premium offers all that plus unlimited domestic long-distance via Skype, Office 365, and a premium SkyDrive account with extra storage.

    That's all speculation, but you see how they could bundle Netflix with their other services to make compelling upsells.