The possible "hidden agenda" behind Netflix-Microsoft partnership

Last week, we witnessed the announcement of the partnership between Microsoft and Netflix. The former is said to be chosen as the streaming company’s sales partner for its ad-supported offering, which is set to roll out at some time in the future. But is it really the only reason that pushed Netflix to do it, or is it for some “hidden agenda,” as well? Needham Senior Analyst Laura Martin says it could be possible that Netflix is hoping to be bought by Microsoft. If that is true, what does it mean for Netflix customers, and what should we expect in the future?

According to Martin, Microsoft is not really the best ad partner for Netflix since “it has never been in the third party ad tech business.” She notes that Netflix could have chosen Google, Roku, FreeWheel, Magnite, or companies with direct sales forces, but it pursued Microsoft, making its intention for the partnership something to think about. With this, according to the analyst, it could be possible that Netflix is hoping to be acquired by Microsoft.

“…It could be that Netflix is looking for an exit,” Martin told Yahoo! Finance. “And all those other players that would have gotten them into advertising sooner can’t buy them. They’re either too small, or regulators wouldn’t let Google take over Netflix, because regulators want Google to be smaller, not larger. So it could be here that really the play is that Netflix is trying to get closer to Microsoft in hopes that after Microsoft digests its Activision acquisition, it turns next and buys Netflix, which would be a complementary kind of video content, premium video content, like Activision is in the video game space.”

If it happens, this could mean big changes for both Netflix and Microsoft. For Microsoft, it would open a new door for a whole new bunch of audiences to whom the company can present its Xbox Game Pass offerings. It could also mean that Xbox studios would be able to get their hands on Netflix’s well-known series, like Stranger Things, The Umbrella Academy, and more. Meanwhile, for Netflix studios, it means bringing Xbox’s original titles to the big screen, which will be beneficial for the streaming company since it needs to constantly present new shows on its platform. These are just some of the exciting possibilities that could happen in case Microsoft decides to buy Netflix, but Martin explained that it “would be more of like a five year play of Reed Hastings” since the Activision deal is not yet settled.