Amazon and Netflix, Get a Room!

Remember when the buyout buzz speculated that Amazon.com (Nasdaq: AMZN  ) would acquire Netflix (Nasdaq: NFLX  ) ? The chatter faded away after state sales tax concerns and years of inactivity.

However, Amazon and Netflix seem to keep showing up whenever an appliance maker rolls out a new gizmo to give couch potatoes their streaming-video fix. Their latest conquest, announced at this week's CES expo in Las Vegas, is a new Web-connected Vizio television.

TVs that surf the Web are becoming old hat, though Vizio is raising the stakes with a remote that features a pull-out wireless QWERTY keyboard. Is this the television industry's first salvo against consumer Wi-Fi gadgets like netbooks and smartphones? The lack of portability is a dealbreaker, naturally, but I've gotta admire how the TV companies are doing everything they can to lure clip-culture junkies off their computers and into their living rooms.

The Vizio set will support Netflix's and Amazon's respective movie-streaming services, plus Blockbuster's (NYSE: BBI  ) ONDEMAND, RealNetworks' (Nasdaq: RNWK  ) Rhapsody music subscription service, and even Yahoo!'s (Nasdaq: YHOO  ) photo-sharing giant Flickr.

Ultimately, this is yet another device -- like TiVo (Nasdaq: TIVO  ) DVRs and Roku's set-top media players -- that has brokered deals with both Amazon and Netflix to deliver their offerings to consumers.

Amazon and Netflix look good together in these deals. Netflix delivers mostly older or indie titles at no additional cost to existing Netflix subscribers, while Amazon delivers hot, new releases a la carte. The two companies were rumored hookup partners when Amazon wanted in on the DVD-rentals-by-mail niche, but now they make even more sense in the realm of digital delivery.

Of course, there's no guarantee they'll ever tie the knot. It usually takes at least one desperate company to broker a deal, and neither business fits that bill. Both are growing nicely, even in this souring economy. However, now that Amazon is broadening its distribution centers by breaking taxable ground in new states -- and other states like New York are angling for a tax bite -- maybe the sales tax that Amazon would have to charge in states where Netflix has a distribution center isn't such a hurdle anymore.

Netflix and Amazon just seem made for one another -- even if each is currently too vain to realize it.

Further Foolishness, popcorn not included:

Do you think Amazon and Netflix should hook up? Post your thoughts in the comment box below!

Netflix and Amazon.com are Motley Fool Stock Advisor recommendations. Try any of our Foolish newsletters today, free for 30 days.

Longtime Fool contributor Rick Munarriz has been shopping online for about as long as Amazon.com has been in business. He owns shares in Netflix and TiVo. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool's disclosure policy has 16x9 eyeballs.


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  • Report this Comment On January 10, 2009, at 3:58 PM, commentguy wrote:

    Michael Dunn: I hate being restricted by Netflix. I would rather way TV channels around the world and movies in 1080p Blu-ray on my PC and set top box on MyTVPAL ( www.mytvpal.com ) that's made using Matrixstream ( www.matrixstream.com ) IPTV platform.

    Michael Dunn

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