Amid the chatter over the past few days about Amazon possibly buying Netflix, Kara Swisher at All Things Digital today instead suggested that Microsoft would make a better Netflix acquirer. Her sentiments echoed my Dec '08 prediction that Microsoft would acquire Netflix at some point in '09. It was admittedly a "long ball" call on my part (especially since I had zero inside dope), but one which actually makes even more sense 7 months later.

Why? Because Comcast and the cable industry's aggressive new TV Everywhere/On Demand Online initiatives make Netflix more valuable than ever for any company looking to offer a subscription-based, broadband-delivered video service. Outside the cable/satellite/telco industries themselves, Netflix - with its 10 million+ current DVD-by-mail subscribers - is the only serious subscription video provider. Its recent stellar performance shows the durability of its model even in the face of the ongoing recession. And it continues to build out its streaming service with various device partners (including notably Xbox 360).

If Comcast succeeds with On Demand Online (and since the technical trial hasn't even begun yet, that's still a big "if"), and other cable operators quickly follow suit, the broadband video industry is poised for a fundamental shift away from ad-only business models to hybrid models where subscriptions are key. Any current or aspiring premium video provider that does not have an established subscription approach is going to be disadvantaged in its access to high-quality programming and ongoing product development resources. CBS's addition to Comcast's trial shows that even broadcasters are beginning to position themselves in the subscription mix.

My full rationale for why Netflix is so appealing for Microsoft is laid out in the Dec post, so I won't restate it here. Of course nobody outside the companies involved knows if any of the M&A chatter is for real. But if it is, my bet is still that Microsoft is the acquirer to watch, not Amazon. I suspect we'll see other analysts making a similar case if things heat up.

What do you think? Post a comment now.