Recent news reports concerning the loss of subscribers at Netflix along and the company’s agreement that it signed with Microsoft to introduce an ad-supported subscription service in 2023 has triggered the emergence of a new round of speculation over whether Netflix may be looking to sell its own business. There are some analysts who are contemplating whether Microsoft could be a potential buyer.
It’s not difficult to understand why the concept has captured interest. Microsoft has launched Game Pass, which is often referred to as”the “Netflix of gaming” using the same subscription model and the ability to present a menu of games. Netflix is, on the other hand is recently moving to publishing games and has released more than 20 mobile games no cost to its paid subscribers.
If you could combine the two the two, it’d be virtually unbeatable at a consumer level. Even if a bundle subscription only included certainof the content of Netflix, and certain portionsof Game Pass’s offerings for a cost that is competitive with the option to stream all of it directly to your smartphone or tablet via the cloud, it’s an easy choice for any budget-conscious entertainment lover.
“Microsoft has been seeking an opportunity to return to the market for quite some time now – beyond Xbox which is. Netflix offers exactly thatand matches Xbox in addition,” tech analyst Ben Thompson wrote in an Update to Stratechery earlier this week.
It’s reasonable in theory, however anyone willing to bet on it is probably overreacting because of the other things going on with Microsoft currently.
Microsoft is based within Redmond, Wash., is currently in the process of the finalization of the $68.7 billion deal to acquire Activision Blizzard. If the deal goes in accordance with the plan and time, Microsoft will become the third largest video game manufacturer worldwide (behind Sony and Tencent) and the biggest video game manufacturer within North America.
“Of course I would have said yes, but if you had I asked me that question last year, I would not have imagined that Microsoft might or could acquire Activision Blizzard.”
Although it appears that the Activision Blizzard deal appears set to go ahead without any issues however, it’s important to understand that the firm is something an estate agent would consider”a “fixer-upper.” Activision Blizzard is the publisher of several of the most valuable games on the market which include Call of Dutyand Warcraft however, both parts of the company have faced separate but important internal problems in the past couple of years.
For Activision this is primarily due to its labor issues within the company that have resulted in the internal QA teams creating video games history through the unionization process successfully. Blizzard is generally believed as being in a serious decline, accelerated by numerous recent revelations of its very toxic workplace culture.
If Microsoft übernimms control of Activision Blizzard, its first decision will need to involve a significant and long-lasting time of organizing and cleaning or the acquisition isn’t worth it in the long run. Contrary to Microsoft’s other recent, prominent video game acquisitions this isn’t a scenario that Microsoft can just change the names of all its stationery and move rid of it. It’s going require a lot of effort to reach Activision Blizzard to where it is required to be.
Furthermore As Thompson states in Stratechery The recent Netflix deal already transforms Microsoft to one of the top advertising firms in this sector as it gives Microsoft access to an audience that is in the millions. If the ad-supported tier of Netflix can build any type of audience, Microsoft stands to benefit greatly from this collaboration.
This implies that Netflix is very valuable for Microsoft for its role as an individual partner since it’s opening up an area that is new to Microsoft. It’s not clear for me to think that Microsoft might undermine this in the near future.
And lastly, Netflix famously runs on Amazon Web Services. Microsoft generally doesn’t seem to be too annoyed with working with companies who are actually rivals, as is the case with the fact that it’s willing to publish Minecrafton Sony as well as Nintendo platforms.
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It’s difficult to envision the possibility of a Netflix purchase by Microsoft in which the primary focus isn’t changing the entire operation into its Azure cloud-based service. It’s difficult to determine the time it would take, but it would bring a number of costs to the deal that are beyond Netflix’s asking priceits market capitalization is in the vicinity of $100 billion. There’s also the chance of ruin the whole deal.
With these three elements that I’m aware of, it seems impossible to imagine to imagine that Microsoft could open a new front in the war on content currently. There’s a lot going on in its most recent acquisitions. The Netflix deal is full of implications for itself and the acquisition of Netflix could come with lots of complications that an organization of the size of Microsoft isn’t in need of right now.
Of course I’m sure if you had I asked me that question last year I would have never thought Microsoft might or would purchase Activision Blizzard. A possible acquisition of Netflix is significantly more costly than that deal however that doesn’t mean it impossible, particularly the case that Netflix’s share price suffers an additional sharp drop.
However, for the time being I’d guess that, if Microsoft is on directly selling a streaming services, it will pursue something less than Netflix but it won’t do that in the near future.