Saturday, May 23, 2015

Who should buy Netflix and why?

By James de Rin

Here’s a clue. If you haven’t read “the everything store” [the book on the story of Amazon] by brad stone then you should. On page 376 it says “Jeff Bezos was tracking a firm [Netflix] he viewed as a potentially dangerous new rival.” And this was in 2008. Boy was he right. Fast forward to May 2015 and Netflix stock is oscillating between $613 and $635 a share, insane making it a $50 billion dollar company. But then Amazon’s stock price has gone nuclear as well at $428 a share up to $200 a share since Christmas 2014 making Amazon a $200 billion dollar company.
So you know the story Netflix began with CD’s and DVD’s in a red envelope that you paid a monthly fee and watched numerous films within that price package. With the advent of faster broadband technology Netflix introduced streaming and the rest is history. Currently with 50,000,000 members and growing it is expected to go to $720and eventually $1000 a share. So who do I think should buy Netflix? Well the answer is Amazon but Bezos should lead the next chapter in streaming content by adding crowd funding.
1.     Discs by mail.
2.     Streaming content $9.99 a month.
3.     Invest in content as per Indigogo and Kickstarter and create more content for the platform.
Amazon Prime is a great platform and deal for content viewing and free with the Prime membership but let’s face it the Netflix platform blows it away. Content on Amazon is good sometimes better than Netflix but not original content, “House of Cards” anyone. Netflix allows you to automatically view each episode…
So Bezos should buy Netflix by buying up the stock and merge Amazon Prime movies with Netflix and keep the Netflix business model say $9.99 a month globally. Times that by 150,000,000 people that’s the eventual market and you get $1.5 billion month revenue!!!

One library just think of the negotiating savings, think of the Netflix platform, think of the 200 million customer reach, think of the one thing Amazon has not created which is the most important part of a store? The banking or the bank. They have Amazon payments which used to take the money for Kickstarter as the payment system for rewards. Now movies, or TV or just content has to be continuously created by Netflix, Amazon Studios, Hulu, HBO for the public’s content appetite and the biggest cost of that is buying content and creating it which drives membership and retention.  What if the public indirectly funded their own content by investing in things they like? Algorithm cash vestor! Oh and Amazon owns the server network that Netflix uses to stream its content. AWS…which is a $2 billion division of Amazon.
So to repeat
1.     Discs by mail.
2.     Streaming content $9.99 a month.
3.     Invest in content as per Indigogo and Kickstarter and create more content for the platform.
4.     Netflix financed by membership and crowd funding.
5.     Crowd Source Capital the crowd funding bank for content…
6.     Then Amazon should buy Kickstarter and Indigogo!
7.     Then you have a self-fulfilling prophecy of constant content creation and content to stream on top of commissions and acquisitions.
8.     Then the everything store really could be called the everything store when it starts selling money Wonga with a soul and disrupts the banks for the customer!
9.     Consolidation of content streaming players coming soon!

Or should Apple buy it and invest in crowd funding? I’m still betting on Jeff Bezos.

No comments:

Post a Comment