July 14, 2009, 8:13 AM — Ever wonder where internet rumors get started? Me too.
Yesterday a rumor about Amazon buying Netflix started making the rounds. On some level it makes sense, right? Amazon has its Video-on-Demand system, Netflix has Watch-Now. Amazon ships 70 skillion* books, baby pacifiers and cans of mushy peas every day, while Netflix's red envelopes flood the postal service. By buying Netflix, Amazon gets a huge new influx of customers that are accustomed to streaming media into their homes (some sources suggest that 20% of Netflix's subscribers – something like 2 million customers – have used Watch Now) and who may be willing to throw down a few bucks to get more recent content via Video-on-Demand (Watch Now content seems to lag behind the DVD schedule).
So it isn't a crazy rumor, but where did it get started? Beyond Netflix's stock price rising, I haven't been able to locate a source. In fact all I've found is posts debunking the rumor. Bloomberg points out that if Amazon owned Netflix, then Amazon would have to start collecting state sales tax in every state that has a Netflix distribution center (which is almost every state) and Amazon has indicated that it really doesn't want to start collecting sales tax from its customers. That alone seems to be reason enough to discredit the rumor. Kara Swisher makes a decent argument that Microsoft, not Amazon, would be a better fit for Netflix (based, in part, on the fact that Watch Now is available on the Xbox 360). I hope she's wrong. A Microsoft buy-out would be bad news for consumers. Netflix's Watch Now is available on many devices, from televisions (including Sony televisions) to blu-ray players to the nifty Roku box that I can't ever resist promoting, plus there are persistent rumors of the service heading to the Nintendo Wii and Sony PS3 gaming consoles. I don't think many of these deals (particularly the ones involving Sony) would survive a Microsoft acquisition.
As per the usual rules of business, no one is talking officially. Netflix and Amazon are both giving the standard "We don't comment on rumors or speculation" line, so we'll just have to wait and see what's going on.
And in even more curious media-streaming news, BlockBuster and Samsung have announced that Blockbuster On-Demand capability is coming to some Samsung televisions (news via Engadget). I thought Blockbuster was about done. What does Samsung know that the rest of us don't?
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