Amazon / Netflix deal makes perfect sense

July 14, 2009 | Paul Boutin | Comments | |

Amazon’s rumored pending purchase of Netflix sent the price of Netflix shares up instantly Monday. The mainstream press, unable to get any inside info so far, have been making up lists of why the deal would be good or bad. PC World’s Brandon Slattery has the best — well, ok, the longest one so far.

hastings

I don’t buy Slattery’s claim that “you can expect subscription prices to soar” for Netflix subcribers. I expect Netflix subscription prices to stay exactly the same. Amazon and Netflix make a good pair. Netflix CEO Reed Hastings has innovated again and again on running the business, to the point where he’s got a Wikipedia entry on “Netflix innovative business practices.” Acquiring Netflix seems like a good deal for Amazon. They can use Netflix as the bargain-but-innovative brand, and charge premium prices for newer and better movies at Amazon.com.

Really, this deal seems like a no-brainer if both companies agree to leave everything alone.

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About the Author, Paul Boutin

Paul (paul@venturebeat.com) covers Apple & the iPhone, social networks & social media, digital music & video, and any crazy Internet story. Paul wrote and edited for Valleywag from 2006-2008, after several years with Wired magazine and Slate. He writes regularly for The New York Times' technology section and sometimes for Wired and The Wall Street Journal. He studied computer science at MIT in the early 1980s, and worked as a software developer and network administrator for 15 years before becoming a professional writer. Follow him on Twitter at @paulboutin, and follow VentureBeat on Twitter at @venturebeat.

  • comeon
    paul - use your brain. last time i checked, i pay taxes on my netflix subscription since they have a physical location in my state. if amazon bought NFLX, we'd all pay taxes on AMZN purchases. that would be brutal for amazon. this deal will NEVER happen under the current tax situation. i expect better from you.
  • jd
    One of the few times where I actually think it makes sense for Amazon to just build it themselves. The main reason is because Amazon is very sharp and would possibly be able to improve it.