Netflix streaming going to Amazon?
Gaming industry analyst Michael Pachter of Wedbush Securities was cited by Forbes for proposing the notion that the real reason Netflix decided to split its company into two entities – Netflix for streaming and Qwikster for home delivery of DVDs and games – was to sell of the streaming side to Amazon in order to eliminate the state sales tax issues that prohibit the online retailer from offering an acquisition bid.
Here's Michael Pachter's statement as picked up on by Forbes:
“Upon reflection, it appears to us that the driver for the separation of Netflix into two businesses—Netflix.com (for streaming) and Qwikster.com (for DVD rentals) —was to position the streaming business for sale to Amazon.com,” he writes in a research note. “In our view, Amazon has always wanted to be in the streaming business, and has been constrained from buying Netflix due to tax considerations. The split up of Netflix’s business addresses the state sales tax issues raised for Amazon in having a ‘nexus.’ If Amazon were to acquire only Netflix’s streaming business, it could triple the size of its content library, and gain traction as an industry leader. Netflix streaming has current content deals that provide it with access to movie content during the premium cable TV window, and Amazon has the financial resources to secure additional streaming rights, including Starz content. Netflix’s financial flexibility is quite limited, while Amazon’s is virtually unlimited.”
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