5 ms·

Verizon Considers Buying Netflix

35 points by dekayed 15y ago

mmurph211 15y ago
"Citing a source close to the matter" - I wonder how much Netflix stock this source had before leaking the story. Don't hedge funds stir rumor for their own gain?
aidenn0 15y ago
Aren't they already in the movie streaming business via FiOS?
- Bo102010 15y ago
  I would guess that lots of FiOS customers also subscribe to Netflix (and maybe don't understand the FiOS streaming interface). So why not give in and try to capture that?
tiles 15y ago
I won't hesitate to add "I hope not" because of the obvious implications of Verizon absorbing an otherwise useful service. It seems disingenuous to portrays Netflix as though it were in legitimate trouble as a business. Netflix has certainly had mishaps and a loss of subscribers; but I don't think that's inclination to suspect that they are looking to jump ship. Selling (and tying) themselves to Verizon would just leave a vacuum for another agnostic service to replace it.
MichaelApproved 15y ago
What an awful idea. Netflix had to make some bad deals that it now has to live with. They'd also have to deal with the dying DVD business that has nothing to do with Verizon's business model. They'd likely have to find a buyer for that and spin it off. Maybe that's what Netflix was trying to prepare for with quikster. Netflix owns nothing. Any exclusivity is small and worth very little. There is no value there. If you're a streaming customer, there's nothing keeping you with them once someone comes out with a competing service at a lower price. Netflix is a distributor that can easily be replaced by any of the big guys: iTunes, Amazon, Microsoft, etc. If Verizon wants to get into this game, they should partner with a big guy who can build the distribution network for them.
- ramidarigaz 15y ago
  > Netflix owns nothing. Except for customers and a well known brand.
  - MichaelApproved 15y ago
    Customers who have no loyalty. There's nothing keeping a customer from jumping ship if Amazon creates a similar service at the same or lower price. There's no contract, no setup fee, no hardware that becomes useless with a new provider. They own nothing that's worth buying at anywhere near their current valuation.
    - erikwiffin 15y ago
      Amazon has created a similar service for a lower price. Amazon Prime gives you unlimited access to a large part of their video catalog. For $79 a year instead of Netflix's $7.99 * 12.
      - MichaelApproved 15y ago
        Amazon's service will eventually be similar, if not superior, but right now their limited content keeps them from truly competing with Netflix. I believe Amazon is simply using this as an opportunity to learn the ins and outs while also ramping up their capacity to stream.
jallmann 15y ago
Absolutely not. Data carriers should not be able to supply any content over its pipes. There is already precedent restricting vertical integration -- see the United States v. Paramount Pictures (http://en.wikipedia.org/wiki/United_States_v._Paramount_Pictures,_Inc. http://en.wikipedia.org/wiki/United_States_v._Paramount_Pict...). That would also seemingly invalidate most of the cable TV industry, but in that case, you're arguably paying for the TV feed (which just happens to be carried over cable), rather than the cable itself (which is what you pay for with Internet access). Same argument applies to the public switched telephone network. You're paying for voice service, not the infrastructure; that is why 'data' is a separate line item on your cellular bill.
- rabidsnail 15y ago
  Verizon already provides cable TV service.
  - jallmann 15y ago
    And? As I said -- when you pay for cable TV, you're paying for the TV feed. Netflix is VOD carried over IP. The power company doesn't try to sell you energy-guzzling AC units.
    - sukuriant 15y ago
      Honestly, I don't see the difference between Cable (video not-so-on-demand) over the FiOS wires and Video on Demand over an IP over the FiOS wires.
      - jallmann 15y ago
        Ignoring the huge technical differences, it boils down to net neutrality. Other services could be throttled in favor of Verizon's, much as the carriers were screeching over VoIP apps few years ago.
        sukuriant 15y ago
1010011010 15y ago
Might as well read: "Verizon Considers Destroying Netflix"
- rwolf 15y ago
  I'm nervous the only thing good enough for me to pay for on the internet will go away. I will have to spend that $7 on coffee again, I guess.
joeybaker 15y ago
Seems like this news falls squarely in the "someone's got to" area. Verizon might not be the ideal buyer, but Netflix has run into the dual problems of bandwidth and IP restrictions. They could really use a corporate parent to fight their way through. Verizon could really help on the bandwidth side, but companies like Comcast, Apple, Microsoft, or Amazon could all help on the IP side.
ansy 15y ago
Verizon is a good partner for Netflix. No product overlap and great synergy. Verizon will get a leg up for the next generation of TV which will sell itself with home and mobile data plans while Netflix will get oodles of capital and improved digital delivery costs. The capital is what Netflix really needs if it wants to spin up premium TV shows at $100 million a pop to compete with HBO. [1] The DVD business probably doesn't do as much for Verizon. Thankfully that's already profitable and Verizon would be getting it for free after Netflix's failed divorce tanked its valuation. I don't think antitrust will be a real issue. The courts have been fairly permissive such as with NBC and Comcast. If anything, Verizon and Netflix is more like Comcast and Xfinity. [1] http://mediadecoder.blogs.nytimes.com/2011/12/06/netflixs-chief-sees-hbo-as-its-main-rival/ http://mediadecoder.blogs.nytimes.com/2011/12/06/netflixs-ch...
- wickedchicken 15y ago
  > great synergy you don't work for verizon by any chance, do you?
slimshady 15y ago
I hope netflix doesn't commit yet another blunder. Though verizon would benefit enormously by this deal, the end users are at risk of locking in with verizon.

35 points by dekayed 15y ago

"Citing a source close to the matter" - I wonder how much Netflix stock this source had before leaking the story. Don't hedge funds stir rumor for their own gain?

aidenn0 15y ago

Aren't they already in the movie streaming business via FiOS?

Bo102010 15y ago
I would guess that lots of FiOS customers also subscribe to Netflix (and maybe don't understand the FiOS streaming interface). So why not give in and try to capture that?

tiles 15y ago

I won't hesitate to add "I hope not" because of the obvious implications of Verizon absorbing an otherwise useful service. It seems disingenuous to portrays Netflix as though it were in legitimate trouble as a business. Netflix has certainly had mishaps and a loss of subscribers; but I don't think that's inclination to suspect that they are looking to jump ship. Selling (and tying) themselves to Verizon would just leave a vacuum for another agnostic service to replace it.

MichaelApproved 15y ago

What an awful idea. Netflix had to make some bad deals that it now has to live with. They'd also have to deal with the dying DVD business that has nothing to do with Verizon's business model. They'd likely have to find a buyer for that and spin it off. Maybe that's what Netflix was trying to prepare for with quikster. Netflix owns nothing. Any exclusivity is small and worth very little. There is no value there. If you're a streaming customer, there's nothing keeping you with them once someone comes out with a competing service at a lower price. Netflix is a distributor that can easily be replaced by any of the big guys: iTunes, Amazon, Microsoft, etc. If Verizon wants to get into this game, they should partner with a big guy who can build the distribution network for them.

ramidarigaz 15y ago
> Netflix owns nothing. Except for customers and a well known brand.
- MichaelApproved 15y ago
  Customers who have no loyalty. There's nothing keeping a customer from jumping ship if Amazon creates a similar service at the same or lower price. There's no contract, no setup fee, no hardware that becomes useless with a new provider. They own nothing that's worth buying at anywhere near their current valuation.
  - erikwiffin 15y ago
    Amazon has created a similar service for a lower price. Amazon Prime gives you unlimited access to a large part of their video catalog. For $79 a year instead of Netflix's $7.99 * 12.
    - MichaelApproved 15y ago
      Amazon's service will eventually be similar, if not superior, but right now their limited content keeps them from truly competing with Netflix. I believe Amazon is simply using this as an opportunity to learn the ins and outs while also ramping up their capacity to stream.

jallmann 15y ago

Absolutely not. Data carriers should not be able to supply any content over its pipes. There is already precedent restricting vertical integration -- see the United States v. Paramount Pictures (http://en.wikipedia.org/wiki/United_States_v._Paramount_Pictures,_Inc. http://en.wikipedia.org/wiki/United_States_v._Paramount_Pict...). That would also seemingly invalidate most of the cable TV industry, but in that case, you're arguably paying for the TV feed (which just happens to be carried over cable), rather than the cable itself (which is what you pay for with Internet access). Same argument applies to the public switched telephone network. You're paying for voice service, not the infrastructure; that is why 'data' is a separate line item on your cellular bill.

rabidsnail 15y ago
Verizon already provides cable TV service.
- jallmann 15y ago
  And? As I said -- when you pay for cable TV, you're paying for the TV feed. Netflix is VOD carried over IP. The power company doesn't try to sell you energy-guzzling AC units.
  - sukuriant 15y ago
    Honestly, I don't see the difference between Cable (video not-so-on-demand) over the FiOS wires and Video on Demand over an IP over the FiOS wires.
    - jallmann 15y ago
      Ignoring the huge technical differences, it boils down to net neutrality. Other services could be throttled in favor of Verizon's, much as the carriers were screeching over VoIP apps few years ago.
      - sukuriant 15y ago

1010011010 15y ago

Might as well read: "Verizon Considers Destroying Netflix"

rwolf 15y ago
I'm nervous the only thing good enough for me to pay for on the internet will go away. I will have to spend that $7 on coffee again, I guess.

joeybaker 15y ago

Seems like this news falls squarely in the "someone's got to" area. Verizon might not be the ideal buyer, but Netflix has run into the dual problems of bandwidth and IP restrictions. They could really use a corporate parent to fight their way through. Verizon could really help on the bandwidth side, but companies like Comcast, Apple, Microsoft, or Amazon could all help on the IP side.

ansy 15y ago

Verizon is a good partner for Netflix. No product overlap and great synergy. Verizon will get a leg up for the next generation of TV which will sell itself with home and mobile data plans while Netflix will get oodles of capital and improved digital delivery costs. The capital is what Netflix really needs if it wants to spin up premium TV shows at $100 million a pop to compete with HBO. [1] The DVD business probably doesn't do as much for Verizon. Thankfully that's already profitable and Verizon would be getting it for free after Netflix's failed divorce tanked its valuation. I don't think antitrust will be a real issue. The courts have been fairly permissive such as with NBC and Comcast. If anything, Verizon and Netflix is more like Comcast and Xfinity. [1] http://mediadecoder.blogs.nytimes.com/2011/12/06/netflixs-chief-sees-hbo-as-its-main-rival/ http://mediadecoder.blogs.nytimes.com/2011/12/06/netflixs-ch...

wickedchicken 15y ago
> great synergy you don't work for verizon by any chance, do you?

slimshady 15y ago

I hope netflix doesn't commit yet another blunder. Though verizon would benefit enormously by this deal, the end users are at risk of locking in with verizon.