Should Netflix buy TikTok for growth?

Should Netflix buy TikTok for growth?

Netflix could be an unlikely but better-fitting purchaser of the operations of TikTok in the United States, according to Alex Sherman of CNBC.

TikTok’s glory days in the United States are numbered. In just a little over a month, TikTok could be bidding its operations in the country good-bye. That is if they fail to find a worthy purchaser. Microsoft is at the forefront of the talks. They have been given the green light by the U.S. government to proceed with the talks.

It’s without a doubt that Microsoft has all the assets to take over TikTok’s operations. However, they do not have the expertise on the social media front. Nevertheless, they can learn that along the way. After all, TikTok is a cash cow waiting to be milked.

Alex Sherman of CNBC, on the other hand, has a different view. He thinks that Netflix should enter the acquisition talks of TikTok.

Competition is tight for Netflix

Sherman posits that Netflix knows its toughest competitors aren’t other video-streaming sites. Instead, he quotes Netflix co-Chief Executive Officer Reed Hastings, saying that ‘substitution threats’ are its main competitors. There are only 24hours within a day, six to eight hours of it are spent on sleep. The other hours are split among work, study, and rest.

The last one is particularly the most important area for Netflix. That is actually the time when users default to the app for entertainment. COVID-19 was generally harsh to companies worldwide. Netflix is just fortunate enough that the line among work, study, and rest has been blurred because of the lockdowns.

As such, usage on the app has been on a record high. However, the company believes that its existence is constantly threatened by change, particularly other forms of online content.

Advertising opportunities

Sherman adds that Netflix has the assets to acquire TikTok. Although it doesn’t have the expertise in handling a massively successful social media app like TikTok, it still needs to diversify. Netflix has a solid promise of keeping its contents free from ads. As such, it will need to find a workhorse to keep its pact. Otherwise, one way or another, they will have to give.

TikTok offers this unique opportunity for Netflix. The wild suggestion of Sherman pushes the idea of synergy. Both apps offer video content, just in different forms. He shares the idea that TikTok stars could have well-curated shows on Netflix. On the flip side, Netflix stars could be helped by the rawness of TikTok to push for viewership on the video streaming app.

Image from Giordano Rossoni/ Unsplash

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