Will Amazon Buy Netflix?

Rumors have it that Amazon could possibly buy Netflix, the leading online DVD rental company. These rumors have been floating around the internet for quite some time.

In a rumor published in Forbes Magazine in early June 2007 that states, “the company that made “going to” the movies easier by sending movies directly to its customers may be bought by online retailer Amazon.com,” is resurrecting again across the World Wide Web. The rumors are stating that Amazon would buy the 12-year-old online DVD rental company Netflix. Netflix’s stock is at a 10-week high on the rumors, which made the stock close at $42.19. In the Los Angeles Times’ technology section, one blog stated, “Both companies are big players in the online streaming business, where consumers can watch movies through special set-top boxes like those made by TiVo and Roku. Amazon, which charges for each viewing, tends to have newer, more popular films available for download, while Netflix streams a more limited selection of older films to its subscribers. Netflix has a catalog of over 100,000 movies and television shows available by mail -- its primary delivery mechanism -- but streams only about 12,000 of those shows via its set-top software. Amazon has made at least 40,000 movies available for streaming.” Michael Olson, analyst at Piper Jaffray, said in June, “I can see why people think it makes more sense and are putting more weight into it this time around. The reason is that if you look at Amazon stock it has essentially doubled since the beginning of the year. So that gives them more currency to potentially do acquisitions.” However, Mr. Olson further added, “Ultimately we don’t think Amazon will buy Netflix. And the reason is that Netflix’s DVD by mail business is going to get worse before it gets better, if it ever does get better.”