"Netflix Inc. ( NASDAQ: NFLX) is the largest streaming media company in the world, with 300 million subscribers and an annual revenue run rate of almost $50 billion. Amazon.com Inc. ( NASDAQ: AMZN) has a subscriber count near 200 million. Netflix is in the business to make money from streaming. Amazon is in the business, in large part, to help it gain Prime members, which drives its e-commerce business more than anything else."
"Netflix would be very expensive for Amazon. It has a market cap of $546 billion, and an offer would need to be north of $600 billion. Amazon's market cap is $2.31 trillion. During most of the past decade, capital to do a deal would not have been available. Today, private equity and the capital markets are bulging with cash, but there are not enough deals to deploy it all."
"Amazon says its future lies in artificial intelligence (AI) and its cloud computing business, where it plans to invest tens of billions of dollars. Its AWS cloud computing business generated $31 billion in revenue last quarter, while its e-commerce business generated $130 billion in revenue. Amazon's AI challenge is that AWS's business is under siege from Microsoft, Oracle, and other large AI cloud companies. And forecasts of AI's wild success remain unproven."
Netflix has about 300 million subscribers and an annual revenue run rate near $50 billion, while Amazon's streaming count is near 200 million. Netflix focuses on making money from streaming; Amazon uses streaming largely to attract Prime members that drive its e-commerce business. Acquiring Netflix would provide Amazon a unique platform to market Prime but would likely require an offer north of $600 billion given Netflix's $546 billion market cap. Capital markets currently hold abundant cash. Amazon plans heavy investment in AI and AWS, but AWS faces fierce competition and AI revenue forecasts remain unproven. Disney+ and Hulu present major streaming competition.
Read at 24/7 Wall St.
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