Netflix has chosen Microsoft as an advertising partner, a questioning choice. According to specialist Laura Martin, this merger would not be trivial and could lead to a takeover of the platform by the computer giant.
Last year, tech giants like Amazon, Google and Microsoft spent billions on diversify their activities. One of the key announcements is the takeover of Activision-Blizzard by the firm behind Windows. Far from the failures of the 2000s (Windows Vista, Zune, Windows Phone…) Microsoft has regained its superb and great ambitions. The Redmond firm was recently chosen by Netflix as an advertising partner.
Concretely, the famous streaming platform will use Microsoft technology for its future formula with advertisements. A real turning point for Netflix which had so far refused to give in to the sirens of “advertising”. While the service has yet to release details about its ad-supported offering, Microsoft’s choice is surprising. Netflix’s advertising market, which has approximately 221 million subscribers, is large and there were many suitors. According to the Wall Street Journal, Google, Comcast and even Roku were in talks with the king of video streaming.
Faced with these companies, the firm founded by Bill Gates even looked like an outsider. Indeed, the name of Microsoft resonates internationally but the giant has not forged its reputation on the segment of “advertising”. For Netflix, Google or Comcast, however, did not look like the ideal partner for this project.. These two companies have competing video streaming platforms. Comcast through its subsidiary NBCUniversal and Google with YouTube. Admittedly, the service of the Mountain View company is not a direct rival, but it competes in the video market.
Conversely, Microsoft is not present in this segment and has a certain expertise in online advertising. A perfect profile for Netflix which also shares a common passion with Microsoft: the video game. If it is still too early to imagine a partnership in this area, it is clear that the two giants are diversifying and betting on gaming. In reality, this rapprochement could well be the harbinger of a acquisition of Netflix and Microsoft. In any case, this is the theory shared by analyst Laura Martin.
A possible takeover of Netflix and Microsoft, the idea is not new
This specialist in the platform’s financial movements believes that the agreement could hide “a hidden agenda” between the two companies. “Netflix might be looking for a [porte de] exit “says the Needham analyst in an interview with Yahoo Finance. “Netflix is trying to approach Microsoft in hopes that after Microsoft digests its acquisition of Activision, it will turn around and then buy Netflix”, she adds. The analyst wonders about the decision of Netflix to have set its sights on Microsoft in the field of advertising technologies.
She reckons Microsoft will need time, and Netflix’s ad-supported offering won’t arrive for several months. While Netflix hasn’t announced a launch date, it wouldn’t come until Q3 2023.
On the other hand, the company managed by Satya Nadella would be the only one able to pay the 100 billion dollars needed for a possible takeover of Netflix. A significant sum, but Microsoft has proven that it is ready to take out its checkbook; as evidenced by the acquisition of Activision-Blizzard for $68.7 billion.
For the time being, there is no official element to support this possibility. We just know that the two companies have a good relationship since many years. The Xbox 360 was the first console to host the Netflix application in HD; while the platform used Microsoft’s Silverlight technology for Watch Instantly.
Moreover, this is not not the first time that a takeover of Netflix by Microsoft has made the rounds of the web. As early as 2009, the idea was gaining ground and an analyst revived this possibility in 2018. Netflix was ultimately not bought out, but the platform is having a difficult season.