Why Netflix Will Die If Yahoo! Acquires It

Jan 7, 2012
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Why Netflix Will Die If Yahoo! Acquires It

If you’ve been following the rumors surrounding Netflix lately, you know that the streaming provider might just be well on its way to being acquired by Yahoo. Details on the matter are scant so far, but there are some who say that the deal could make some sense for both sides.

For Netflix, a Yahoo acquisition could allow management to finally take a reprieve from the barrage of criticism they’ve been facing over the last several months.

From taking heat for raising prices 60 percent on DVD-by-mail and streaming customers to trying to spin-off its rental business before quickly backtracking, Netflix management has done little to make its case that it deserves to be running the company.

Yahoo, meanwhile, seems to have an insatiable desire to acquire a prominent streaming-video provider. Last year, the company was reportedly the first to approach Hulu about acquiring that company before talks broke down. Now that it’s reportedly considering buying Netflix, it appears it has some big plans for streaming video.

But let’s not forget which company is going after Netflix. Yahoo isn’t the online giant that it once was. Sure, it has a major presence on the Web and it has the cash to back up just about any decision it makes, but it’s on the decline. And the chances of it reversing its tailspin anytime soon seems quite unlikely.

Let’s keep in mind that over the last several months, Yahoo has let its CEO go over bad performance, reportedly fielded numerous buyout offers, and all the while, failed to make a deal happen. What’s worse, all the bids that supposedly crossed the board of directors table reportedly did little to maximize the company’s potential.

[aquote]Netflix is a company that, like Yahoo, is on the decline[/aquote]

So, I’m not quite sure how Netflix can change that. It’s a company that, like Yahoo, is on the decline. Yahoo might give it a bit more of an online presence, but in the hardware space, I don’t quite see the upside for Netflix.

At the end of the day, though, I think it’s the Netflix user that loses the most in this scenario. I can’t find a single instance in recent years where Yahoo has acquired a company and actually improved the experience of using its products. Too often, the online company acquires a firm, lets it operate as-is for a little while, and then tries too hard to integrate it into its services, thus damaging its market appeal. To think that wouldn’t happen with Netflix would be a mistake.

Suffice it to say I just don’t think Yahoo buying Netflix is a good idea for any party. Yahoo would find itself with a streaming company that has lost its footing. Netflix would find itself with an online firm that has forgotten what it takes to be successful on the Web. And users would lose Netflix as they know it today.

Leave Netflix alone, Yahoo. It’s better for all of us.


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