People have been saying for years that Amazon.com (Nasdaq: AMZN ) should buy Netflix (Nasdaq: NFLX ) , typically just because the leading digital video service would give Amazon a head start in that very promising market. Others think Apple (Nasdaq: AAPL ) should buy the company; if nothing else, it would be a good use of Apple's bulging coffers. Then again, it would make some sense to roll Netflix into Microsoft (Nasdaq: MSFT ) , since the companies already share some technologies and Netflix CEO Reed Hastings sits on the board of directors in Redmond.
But those transactions won't happen, people. The one place where Netflix fits perfectly is Google (Nasdaq: GOOG ) . Netflix and Google have a couple of very fundamental philosophies in common, which would make it very natural to fold the two into a single information-crunching behemoth.
Affinity No. 1: Same quick-fire approach to invention
They share the same approach to new products. Google is famous (or infamous) for rattling out new products and services at breakneck speed, then fixing them as needed. The search engine receives mostly silent and unheralded updates every week, Android gets a new major version every six months or so, and the Chrome browser moves to a new version every six weeks.
And here's what John Ciancutti, Netflix VP of personalization technology, says about his company's development habits:
Our core mandate is to relentlessly experiment with the technologies, features and experiences we deliver to our members. We test every new idea, so we can measure the impact we're having on our customers. Are they finding more content to watch? Are they enjoying the TV shows and movies they're seeing better?
If so, the idea is a winner and we quickly roll it out to every customer. This approach allows us to understand when we've gotten it right; or conversely to fail quickly and cheaply.
Rings a bell, doesn't it? Compare and contrast this with Apple, where products don't go out the door until they have been perfected as far as possible, and release cycles tend to be annual.
Affinity No. 2: Web content is the future
It should come as no surprise that Google loves online presentations: the Big G empire is built upon search engines, mail services, advertising, and more that are built for access through a browser. The company does have a couple of native applications under its belt, but the Chrome browser is a browser, and one of Picasa's best features is how seamlessly it pushes your photos into the online cloud. Google Desktop? Largely unsupported and nearly discontinued. Google is all about browser-based delivery whenever possible.
As for Netflix, Mr. Ciancutti also professes his love for HTML5 interfaces -- and it ties in neatly with the rapid development model:
The technology is delivered from Netflix servers every time you launch our application. This means we can constantly update, test and improve the experience we offer. [...] Our customers don't have to go through a manual process to install new software every time we make a change, it 'just happens.' This capacity for testing is so critical to how we innovate, we're willing to forgo having a native UI experience to accommodate it.
Netflix would do its entire movie delivery package in this format if possible, but it's hindered by incompatible technologies and a lack of copy protection features in the current state-of-the-art web technologies. So video streams lean on Microsoft's Silverlight product in desktop windows and on whatever native formats are available on your iPhone, PlayStation 3, Xbox 360, or Blu-ray player. But the user interface around it is all centrally managed, just like Gmail or Google Search.
The Foolish bottom line
If Netflix should become anything other than a stand-alone success, Google is the rightful home for it. The quick-release mentality that makes it a good it for Big G would never fly with Apple, and Microsoft isn't exactly known for quick release cycles. Amazon could do it, and Hastings clearly admires that company. But Amazon doesn't have the cash reserves to do anything but a stock-swap deal, and it's also busy moving in a different direction these days.
And what's in it for Google? An instant leadership position in online video, the opportunity to marry Netflix to YouTube somehow, and an enormously weighty asset to wield when discussing the future of Google TV with Hollywood studios. And it'd be a heck of a better use of the cash than throwing it away on Groupon.
Wouldn't Netflix be a terrific present under the tree for Google this Christmas? Discuss the possibilities in the comments below.