Monday, October 8, 2012

Book on Netflix, Inc. (NASDAQ:NFLX) says Amazon.com, Inc.(NASDAQ:AMZN) made an offer for it in 1999

Online retailing giant Amazon.com, Inc.(NASDAQ:AMZN) has recently made a foray into the video streaming services business in direct competition with established player Netflix, Inc.(NASDAQ:NFLX).

A recent book, Netflixed, on Netflix however has revealed that in 1999 Netflix founders actually discussed selling their company to Amazon.

According to the book, written by a Reuters reporter Gina Keating, Netflix founders Reed Hastings and Marc Randolph had met with Amazon chief executive to talk about various options including a partnership between the two companies or a sale.

However Amazon, at that time, had offered only $12 million and this was not acceptable to Netflix founders.

CNET said that Jonathan Friedland, the chief communications officer for Netflix called to say that Amazon had never made such an offer.

Netflix founders were not very sure about the success of their business model and there were reports that it had tried to approach Blockbuster for a sale at $50 million. Blockbuster however declined to buy out the company.

Blockbuster subsequently filed for bankruptcy protection in 2010 and its assets were acquired by Dish Network.

After the aborted attempts to sell the company, the founders have managed the turn the pioneer in its field into a market leader in the segment with a market capitalisation of $16 billion last year.

The book provides clues to what is happening today in the video streaming segment and why Netflix is a bit wary of Amazon Prime, the unit that it set to compete with Netflix on its own turf.

According to Keating, "after Ted Sarandos, Netflix's content-acquisition chief, learned in 2004 that Amazon was preparing to launch a mail-order video rental service to compete with Netflix, Hastings responded by negotiating with Bezos to try to keep Amazon out of the business."

The book will go on sale on Thursday.

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