The executive director of Microsoft Satya Nadella is reportedly planning to buy the content streaming platform Netflix in 2023. The information was released by the news agency Reuters in a report published yesterday, Tuesday 20 December. But what is true in this news? Maybe nothing, considering the numbers that have come out: crazy numbers even for giants like these.
Is Microsoft really going to buy Netflix? Or is it the streaming giant out to sell? Here's what we know so far
According to the publication, Microsoft could buy Netflix and pay up to $1.8 trillion, that is, a market value 13 times greater than that of the streaming service, valued at nearly $190 billion annually. However, the costs would be significant given that analysts expect the return on investment to be only half of its weighted average cost of capital of 8%, after taxable $8 billion in operating profit. Since Nadella took the helm of Microsoft, the company has gone on the market several times to buy companies. In 2016, the social network LinkedIn was acquired a few years after thepurchase of Mojang Studios, developer of Minecraft.
Most recently, Bill Gates' company announced the acquisition of developer Activision Blizzard. But he has to face serious problems trying to complete the purchase, after rivals claimed it would be a market merger. The two companies are already closely aligned. Netflix has selected Microsoft as an advertising partner for a new ad-supported subscription service, and Microsoft chairman Brad Smith has joined Netflix's board.
Part of the rationale for this potential deal is that Microsoft wants to offer a video game streaming service to multiple devices. For its part, Netflix has its own big projects in games and has recently purchased several studios. Therefore, joining the Microsoft empire would boost those ambitions. A package with streaming TV and games together, for example, isn't hard to figure out. It remains to be seen whether the deal will, in fact, be sealed between the two tech giants.
