Hmmm. Two interesting points in the second half of this Huffington Post article — linking the fact that Mark Cuban last month upped his stake in Netflix with the idea that it is a ripe takeover target for Chinese e-commerce giant Alibaba.
Reports are circulating that Alibaba is eyeing a stake in Lionsgate, a studio with a large film and TV library that includes the “Hunger Games” and “Twilight” films. So for a moment, we’ll go with the notion that Alibaba could be interested in Netflix.
In my book, I detailed the on-again, off-again talks that Reed Hastings and Jeff Bezos have had over the years exploring partnerships, cross promotions, and yes, a merger, between their two companies.
It looked like a great fit: Netflix wanted access to Amazon’s huge customer base, and Amazon wanted to hedge cooling DVD sales with hot online rental. The two CEOs could never agree on financial terms, and ultimately, tax issues related to Netflix’s DVD distribution centers may have derailed a merger.
Yet it seemed culturally dissonant to wedge a software/entertainment company like Netflix into a retailer — like selling bacon at a bicycle shop.
Now comes the Chinese version of Amazon, apparently looking for a way to jump-start the incredibly complicated and costly process of setting up an online streaming service from scratch.
Netflix is looking to expand internationally to offset cooling domestic growth, and China, Hastings once told me, is one of his dream markets. A corporate marriage between these two seems auspicious, yet China, with its strict censorship, seems antithetical to what Netflix is all about: the content you want, when and where you want it. Bacon, bicycle.
Well, this is interesting. Netflix already has a sizable and fast-growing subscriber base in Australia, even though the streaming service is not set to launch there until early next year, according to this graphic from the personal finance site Pocketbook.
I have seen lots of online postings about apps and techniques for getting around geoblocking in countries that don’t offer Netflix. That makes me wonder what the company’s global “grey market” subscription base is, and whether those streaming-starved subscribers determined which international markets Netflix chose for its big 2015 expansion.
This article in the Sydney Morning Herald also shows that the global value of streaming is expected to rise by nearly 50 percent over the next four years — to $10 billion — thanks to “streamcasters” like Netflix, Hulu Plus, and Amazon. That figure seems suspect to me, as Netflix 2014 revenue on streaming alone is expected to be $4.7 billion. With HBO and cable sports getting ready to hop on internet TV subscription, that’s gotta be too low.
I don’t really agree with the premise that Amazon Instant Video is within striking distance of Netflix, not just because the two services are still so far apart by the only measure that counts — hours streamed — but because consumers use the two so differently.
Yes, you can binge-watch TV shows on Amazon Instant Video — I watched almost an entire season of Rome last weekend while nursing a cold. But the hybrid subscription/pay-per-view Amazon Prime model inhibits you from surfing the catalog and sampling content in a way that racks up significant viewing hours or consumer attachment.
In my mind, consumers turn to Amazon — and to Apple’s iTunes for that matter — when they want to watch a specific movie or TV show, sort of how we used to go to Blockbuster (and now Redbox) for newly released titles. We use Netflix to find something to watch, the way we used to channel surf.
This is what Reed Hastings calls “different use occasions” that make up the spectrum of the home entertainment market. Hastings used this concept to dismiss speculation that Apple would kill Netflix when iTunes began selling movies and TV shows. It sounded like wishful thinking at the time but — he was right.
Anyway, this Motley Fool note contains a lot of interesting stats about streaming that remind me of the adoption curve for online DVD rental: