Summary List Placement
Netflix laid out its M&A philosophy for investors this week.
The streaming service has been picky, to say the least, about acquisitions. It’s made only sporadic under-the-radar buys, like its IP-driven purchases of MillarWorld and StoryBots, and the acquisition of New Mexico’s ABQ Studios for the production space.
It sat on the sidelines this year while rival Amazon snapped up James Bond-studio MGM and competitors including WarnerMedia and Discovery merged to compete in streaming.
Netflix said in a shareholder note on Tuesday that it hasn’t seen any “must-have” assets in the marketplace, or found a compelling reason to bid on the major targets out there.
It’s interested in content companies with attractive IP or film and TV libraries, but only those that aren’t tied down by pre-existing deals.
“If some of these content assets are heavily encumbered and limit our ability to use them on Netflix, then they’re of limited value to us since our top priority is to grow the core Netflix business,” said Spencer Wang, Netflix’s vice president of investor relations, during the company’s second-quarter earnings interview.
Those pickings are slim in 2021. Most content companies have either licensed out their libraries or started their own services.
Netflix’s M&A strategy would likely exclude studios like Lionsgate or Sony Pictures, which industry watchers have speculated Netflix could buy for their IP.
“There’s not a lot there that’s under explored,” Neil Macker, senior equity analyst at Morningstar, told Insider of those targets.
Some of Netflix’s most fruitful deals to date have been with proven hit makers like Shonda Rhimes, rather than corporate acquisitions.
Netflix is also venturing into video games. Wang said, “we’ll see,” when it comes to acquisitions on the gaming front.
But media-industry sources told Insider that it would be tough to find a gaming studio with the kind of high-profile IP that Netflix would want that wouldn’t spark a bidding war. There’s been a lot of consolidation in the space already. They thought Netflix would experiment with video-game content on its own and with partners first.
Nonetheless, there were a few types of companies that industry insiders and analysts thought could fit the bill next time Netflix goes shopping.
A character that Netflix could build worlds around like Germany’s Perry Rhodan
“Lupin,” a series based on a fictional French thief, became a big hit for Netflix this year. The character was beloved in France but hadn’t amassed a global audience until Netflix.
Other locally beloved characters with rich universes could make good acquisition targets for Netflix, said Sebastian Blum, who leads the Media Entertainment and Consumer Internet division at OC&C Strategy Consultants.
Perry Rhodan, a German space opera book series that’s published by Bauer Media’s Pabel-Moewig Verlag, is one example.
A niche streamer with an attractive content library like the Criterion Collection
Netflix could also buy a niche streamer with a rich catalog like Janus Film’s Criterion Collection, said Fareeda Ahmed, a principal with the international management consulting firm Arthur D. Little.
This would be more of a retention play than an IP play, because it’d give subscribers a breadth of critically …read more
Source:: Businessinsider – Tech
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