Hopefully Bogus Rumor: Verizon Eyeing Netflix for Purchase

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Oh rumor mill, please don’t let it be true that Verizon is interested in buying Netflix.

The report from DealReporter, via Deadline, has sent Netflix’s stock price soaring. That’s great news for Netflix shareholders, but potentially terrible news for Netflix customers.

(MORE: Netflix Reveals New Mindset, New Competition and New Friends)

Netflix is currently available on smartphones, tablets, game consoles, televisions, set-top boxes and computers, regardless of who’s providing the internet service. The obvious concern with a Verizon-owned Netflix is that the service could be limited in some way to Verizon’s own subscribers, whether it’s through Verizon Wireless on phones and tablets, or through Verizon’s home internet service.

Of course, an acquisition would be subject to regulatory scrutiny, and it’s possible that the FCC would make Netflix maintain the status quo of supporting lots of devices on any internet service provider–at least for a few years. But even then, Netflix could change for the worse.

Netflix, you see, is a disruptor of traditional television services. The company’s not interested in propping up old business models such as cable television and pay-per-view video, and so it has aggressively pursued more content, often going up against other media companies to do so. Netflix successfully bid against HBO and AMC for the upcoming series House of Cards, and struck a deal with 20th Century Fox to bring back Arrested Development. It has beefed up its movie catalog so that bored couch potatoes don’t have to pay for on-demand movies through their cable boxes. Why would a Verizon-owned Netflix spend millions on content deals when it’s better off letting established media companies take on those expenses? After all, there’s no business lost if customers hang onto their Verizon TV subscriptions to get that content.

If Verizon wants to get into streaming video, I’d much rather see the company build a service with Redbox, as rumored. Creating a competitive service to Netflix would take a lot of work, including investment in content and a push onto phones, tablets and game consoles. The choice of an alternative service would be good for consumers. Buying Netflix itself–a service that’s already dominant–would too easily lead to complacency by Verizon. Let’s hope this scuttlebutt goes away.

(MORE: Report: Redbox + Verizon = Netflix Killer?)

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