What I Would Do with Netflix if I Were Facebook and Just Acquired Them

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People LOVE to watch movies together.   When I look back over my decades past, through various life stages, among the common memories I remember with pleasure are the "movie nights" with old friends.

I know I'm not unique in that regard.  I suspect there are tens of millions around the country, just like me who have moved far enough away from the old home town to make those get-togethers with old friends implausible. 
 
Facebook (NASDAQ: FB) has done a masterful job of re-creating the connections between old friends.  These friends might not have otherwise stepped forward to call old acquaintances out of the blue after years of separation of time and geographic distances.  I'm not a phone guy unless I'm talking business because on a phone call it is awkward if one of the participants is not constantly talking.  Although the technology is not yet perfect, Skype, now owned by Microsoft (NASDAQ: MSFT) recently opened the door to hanging out with old buddies by integrating their contacts with Facebook friends.  For social purposes, I find Skype to be much more natural than a traditional phone call.  It doesn't require constant jibber-jabber and is more like being there in the room with your friend or family member.
 
If I were calling the shots at Facebook, after acquiring Netflix (NASDAQ: NFLX) I would get my programmers together with Microsoft (Skype) in order to work on integrating the three and create a win-win for everyone by launching a new feature called "Movie Night." 
 
I would craft it so that when customers go into Netflix, they can click and connect to a streaming movie while users can see one another on a small screen in boxes below the movie.  For the sake of bandwidth, they might necessarily be required to pause the movie (just like we did throughout the movies in the old days) when anyone in the room has something to say.  They can also have instant messaging throughout if they want to keep the movie playing while still making occasional commentary without speaking. 

The integration of all three services would seem a natural fit and plausible when considering that Facebook and Skype are already integrated to some extent and CEO Reed Hastings is on the board of Facebook.  He also has a relationship with Microsoft having spent several years on the board until he resigned in November.  This would also be a possible source of revenue for Skype as it could significantly increase the sale of Skype "credits."  Netflix could also increase subscribership by having the "movie night" promoted through Skype and Facebook.  Of course Facebook could also increase revenue by owning Netflix.

That being said, when Hastings founded his first company, Pure Software, as a software engineer, he had little experience managing people and running a business.  Hastings learned many valuable lessons from the school of hard knocks before he founded his second start-up that is Netflix.  Mark Zuckerberg is now learning the same lessons as a younger and less experienced CEO and would benefit from the experience of acquiring Hastings.  Perhaps Facebook could benefit by making Hastings president while Zuckerberg serves as CEO. 

M&A speculation aside, Netflix could certainly implement the Movie Night without the assistance of Facebook, but I tie the three together because of the aforementioned synergies. 

The idea of a three-way integration came to me a year ago as I joined my father and an old friend of mine who reside in Pittsburgh for a Civil War documentary.  I had them point the lap top camera toward my father's television while I watched with them from Palm Beach, Florida.  It was a fun evening that clearly would have been more effective if there was a way to watch the film in "first generation" as opposed to a web cam shooting a television screen.  My father, like many including myself, uses an HDMI cord, so he can still watch Netflix on his large flat screen television with the streaming content running from his laptop computer.

This is the direction in which streaming is heading, so they might as well get started now.  I suspect that I am not the only person in America who has tried this method of achieving a long distance movie night and I believe the demand will grow exponentially.  Hence, I smell opportunity here. 


Scott Ryan Anderson has a long position in Netflix and no position in Facebook or Miscrosoft.  The Motley Fool owns shares of Facebook, Microsoft, and Netflix and has the following options: long JAN 2014 $20.00 calls on Facebook. Motley Fool newsletter services recommend Facebook, Microsoft, and Netflix. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!

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