Netflix on Monday regained some confidence among investors, thanks not to anything the streaming video company did right, but something it just might do: Sell itself to Verizon.
The report, which came by way of DealReporter (paywall), sent Netflix shares up 6.8 percent during midday trading, Deadline.com reported. And that gain mostly held up throughout the day, too, with Netflix stock closing up 6.18 percent.
For a company that’s lost nearly 80 percent of its value since a peak in June, that’s pretty good news. (Netflix is currently worth about $3.4 billion based on market capitalization, according to Forbes, which also anticipates a takeover.)
But it underlines a starker reality: Netflix is going to have to do something radical to make up for all the love (and customers) it lost over the summer and fall of 2011 after making a series of unpopular and costly decisions — from failing to renew its contract with critical video provider Starz (which provided Netflix with Disney and Sony Pictures movies) to raising the price for all of its customers by 60 percent to contemplating splitting its DVD and streaming video into two separate services, only to back down from that final maneuver after enduring a tidal wave of customer criticism.
Also, the report, if true, underlines the seriousness with which Verizon — the nation’s largest wireless company — is approaching the red-hot streaming video market.
Verizon was already been reportedly mulling a purchase of kiosk DVD-rental upstart Redbox to leverage Redox’s deals with content providers for a new Web video streaming service, codenamed “Project Zoetrope” (get it?), TechCrunch reported on Wednesday.
Independently, Reuters reported that Verizon was seeking to launch a streaming service to go head-to-head with Netflix.
But if the company bought Netflix outright, it wouldn’t necessarily have to do that. Or, rather, it could use Netflix as a piece of its overall content strategy, including Verizon’s currently limited FiOS TV offering, an expensive fiber optic network. Verizon would rather spend money partnering with cable companies and content providers to deliver TV over the Internet, according to VentureBeat.
Whatever happens, the sheer number of reports indicates that Verizon is planning something big. We’ve reached out to the company for more information on their streaming video plans and will update when we receive a response.
Correction: This post originally mistakenly stated that TechCrunch’s report was published on Friday, when it fact it was published on Wednesday. We regret the error.
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