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:

  1. Better and faster infrastructure for serving a larger base and scaling.
  2. Access to millions of credit cards.
  3. 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.

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