Rumor has it (coming from major news outlets) that movie rental company Netflix may be purchased by internet retail giant. The stock price of Netflix went up almost 7% today amidst the rumors.This rumor has been circulating around the internet for a number of years, and has yet to materialize. One analyst has said that it is more likely this time around because Amazon’s increased stock price this year has given them more purchasing power. This could be a purchase meant to help with Amazon’s less than spectacular unbox service.
Right now, Netflix has some 6.8 million subscribers, but the majority of Netflix users are probably not ready to dive into digital downloads just yet. Both companies have denied this deal, and there is a lot of analyst skepticism. Supposedly, this deal would introduce a taxation problem for Amazon. Because Netflix has distribution centers in many states, Amazon may have to pay sales tax in those states. Many of these analysts have been quoted as saying the deal is unlikely.
Right now, Amazon’s unbox service is relatively unpopular. Netflix already has already added the ability to play over 2000 movies directly on your computer. The two companies coming together could give a really big boost to the internet movie business. I have read that the two companies have very different corporate strategies, which could be a problem, but as for now, we have to wait and see if the tax hurdle really is a hurdle at all.