Larry Dignan on why Netflix had to split out the DVD business before an Amazon acquisition would be likely:
The tax issue is that an acquisition of Netflix’s DVD business would give Amazon more sales taxes to collect.
You know what Amazon is 100% opposed to paying: sales tax. This idea isn’t as far fetched as the headline makes it seem, now Netflix may not have decided that Amazon is the suitor when they did this — but damn would an Amazon acquisition make a ton of sense.
Such an acquisition does a few things for a service like Netflix:
- Better and faster infrastructure for serving a larger base and scaling.
- Access to millions of credit cards.
- Gives the streaming service leverage over studios — Amazon has to sell a disproportionate amount of the DVDs which they could easily threaten to stop if studios don’t play nice on streaming.
I really like the prospect of Amazon buying Netflix.