No one likes a price hike, and that was especially the case for Netflix customers who were outraged when the online video service boosted prices in July as a result of splitting its DVD mail order business and streaming video service. Now, Netflix is paying the price for that decision.

The company today said that more people are canceling their Netflix subscriptions than expected, sending the stock down more than 15 percent.

Here’s a look at what’s going on at Netflix:

Despite an erosion of customers, Netflix maintains that splitting the services was "the right long-term strategic choice."

The Netflix stock sell off raises the question: Could this be the time for Amazon to make a bid?

Oftentimes, companies split operations in order to make themselves more attractive to possible suitors. Could Netflix be making that strategic decision?

Amazon likely would be interested in the streaming video portion of the Netflix business. (One of the reasons floated in the past that Amazon didn’t go after Netflix is that it would give the company physical presences in many states, subjecting it to collecting sales tax. And, we all know how Amazon feels about that issue).

Amazon has long been discussed as a potential buyer of Netflix. But Netflix’s elevated stock price (plus the tax issue noted above) has made the company largely untouchable by Amazon.

With the sell off today, Netflix is now valued at $9.2 billion. That would still be a pretty hefty price tag for Amazon, especially now that it has other options on the table.

Reports circulated last week that Amazon could pursue a deal with Starz after a content distribution agreement with Netflix ends in February.

And then, of course, there’s Hulu. Amazon is reportedly one of the bidders talking to the Netflix rival, a buyout which could make sense given the personal connections between Amazon’s Jeff Bezos and Hulu’s Jason Kilar. Hulu also may be a lot cheaper, with reports suggesting that it could sell for as much as $2 billion.

This much is certain: Amazon — which is preparing the launch of its own tablet computer — wants to be a bigger force in online video.

The question remains: Will it pay up to get there? And is Netflix the best fit?

My guess: Netflix is still too rich for Amazon, which incidentally just passed the $100 billion market cap mark.

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  • Guest

    What do Netflix or Hulu offer that would merit a buyout? It seems like both companies are haemmhorageing both customers and content, so to buy such a company is to catch a falling knife.

    • johnhcook

      Would an Amazon purchase of Netflix or Hulu provide customers and video content relationships? That could be especially important as Amazon looks for a differentiated strategy on tablets and moves deeper into the content business. (Look what it is doing with books). 

      That said, Amazon has not shown a willingness to make those types of big buys in the past. (Its biggest purchase to date is the $850 million or so purchase of Zappos, which was easier to integrate since Amazon has just left the company run on its own pretty much). 

      • Eric Peters

        $9B market cap would still be a lot to swallow, especially with only $6B of cash on the books (probably some good % stashed away overseas too)

      • Guest

        Netflix and Hulu don’t produce any content of their own; they have negotiated contracts for others’ content that are now expiring and that are not being renewed. In effect, Netflix and Hulu are becoming companies in search of content. Zappos, Woot, and other Amazon acquisitions have been bought as these companies were growing, not as they were dying.

        Imagine if one day Comcast told you that you would be paying 60% more for service and that you would have 40% fewer channels. Would anyone be surprised by a sudden drop in subscribers afterward? Would any company in their right mind buy such a doomed enterprise?

  • luckysilver

    i dont know what people are complaining about in regards to netflix !! 7.99 a month for unlimited streaming is very cheap in my opinion. one thing netflix might consider that would bring some folks back is a pay per view option in addition to the 7.99 streaing content ! i think actuall dvds are going by the wayside anyway. id rather stream on my phone or laptop from anyplace than have to carry or worry bout dvds.

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