Ryuu96 said:
Netflix is a nascent competitor to Microsoft now thanks to their gaming segment, the nascent market being game subscription services and cloud streaming services, something which regulators are already questioning if Microsoft has too much of an advantage in, it would be easy to argue that Netflix has the potential and capability to become a direct competitor to Microsoft more than any gaming publisher they acquire thanks to their game subscription service/cloud streaming services not reliant on Xbox. The CMA/FTC/EC have in the past couple of years started to re-examine how they look at nascent markets with EC blocking a few nascent acquisitions recently. To them, it could very much look like Microsoft, who already has an advantage in the subscription/cloud market, acquiring and extinguishing a nascent market competitor, for those reasons, it could very well have a higher chance of being blocked than even ABK (FTC will block it regardless) and regulators are going to hammer hard on a near $200bn acquisition in the current climate, in order for Microsoft to acquire Netflix, Netflix would likely have to kill their gaming division first.
Spending your entire cash balance on one company is a risky move no matter what inflation is at, plus it's their entire cash balance in the bank and having to either rise an extra $60-$80bn or do the acquisition using stocks which is something that Microsoft rarely does and they'd be spending their entire cash on a low profitable company at that. I don't think Gaming/Netflix is comparable, Microsoft for starters is already in Gaming and has been for dozens of years, they have absolutely nothing in Film/TV. Also for Gaming there was a pattern, first they acquired dozens of companies, then Phil was promoted to Satya's leadership team, then they banged on about being all in on Gaming and then they went for Zenimax and then they went for ABK...There's absolutely none of that in regards to Film/TV markets, there's no pattern, there's no history and there has been no interest expressed by anyone in Microsoft for that market. As I said, Films/TV is lower profits than Gaming, it's a bigger risk, especially blowing your entire cash balance on it and even if they got Netflix it would be years before they combined Netflix/Game Pass together due to various factors (technical, infrastructure, servers, etc), in the short term they could do "buy Game Pass/Netflix and get Netflix/Game Pass for free" I.E. What they do now with Game Pass Perks. |
I doubt that MS will spend all of their cash reserve for the purchase of Netflix. They will do what most companies do and borrow a lot of it because they get better value for their money that way. It probably will be a combination of a lot of financial products to secure the purchase either way, MS has more than enough resources to make it happen.
Gaming and Netflix is definitely comparable because they are entertainment content. You forget that Netflix has a gaming division because they see the same thing as MS. Its all content and users goes where the biggest bang for their bucks. Users are more interested in value, its the reason why we see so many streaming services. At the end of the day, a game is just entertainment content. The company that can provide that content at a price on an international scale will secure the lion share of users. Being able to deliver that content no matter what a user uses increases the chance of getting subs. MS went for Zenimax and ABK because they were up for sale. If Netflix is up for sale, MS will definitely attempt the purchase because everything Netflix does is in line with where MS is going as a busines in entertainment.
Doesn't matter if Films and TV are lower profit, tell that to Apple. Its about the users and keeping them into your eco system. MS is building a streaming empire and entertainment is a big part of it. They have already transitioned all their software to streaming. They have huge server farms all over the world for streaming. They created a ad based business to take advantage of streaming. When you provided multiple users internationally with all their content, and then allow all that content on whatever device a user has, you have the potential to serve billion of users. I believe you are thinking way to much like a gamer and what is good for you as a gamer. What I see is what is good for MS as a whole and a business who is trying to be the leader in delivering content. A purchase of Netflix makes a world of sense because if Netflix is up for sale, then if MS does not purchase them, Google or Apple will. Its the same with ABK. If MS did not try to purchase them then some other big player will.
