It's not often that I’m in favor of consolidation or monopolistic behavior. But in this case I’m tired of paying 4 or 5 different streaming services. Someone has to start consolidating services and that somebody has to be Netflix.

Netflix is stagnating. I think they see the writing on the wall. Their recent announcement to create a marketplace as well as games seemed to me a bit desperate. However, it’s not a bad if you own the right intellectual property to monetize this.

So let me break down why Netflix NEEDS Viacom to continue to survive.

The Marketplace:

So Netflix wants to start a marketplace. What are they going to sell in it? Can anyone name any kids show that they 100% own rights to and can sell kid toys n shit? I can’t and I have kids.

In comes Viacom. Think of all your kids’ favorite Nickelodeon shows that they own. And Comedy Central. And MTV for that matter, I can see them coming up with so much merchandise for these flagship shows.

Gaming:

I don’t know what Netflix’s plan is for gaming, but it sure would be easier if you had existing relationships with game publishers to license out your existing property. Thats what Viacom has done and licensed all of its nickelodeon characters for their new Nickelodeon Super Brawl World game as well as a few others they already have.

Theme Parks:

This is what would bring them at least on similar plane as Disney. The nickelodeon theme parks are not even in the same stratosphere as Disney, but they exist nonetheless and generate revenue. I don’t think Viacom owns the parks themselves but again they own a shit load of intellectual property that they currently lease out.

Live TV:

Netflix ain’t got it, they’ve been thinking about it, and Viacom got it. Not much else to be said.

Sports:

Viacom has the rights to the Super Bowl for 11 YEARS. Imagine watching the Super Bowl on Netflix, that would be cool.

Another hidden gem that not many know is Viacom owns Bellator, the only competitor to the UFC. There’s a lot of untapped potential there. They can become real competitors by streaming Bellator fights to their current subscribers.

Lastly, the holy grail of all - Ads:

This is Netflix’s kryptonite. The day the say they’re considering ads, I bet the stock craters. Or it goes up since its somewhat bullish move, but I bet new subscriber numbers go down. I know of one sneaky way in which they can start generating Ad revenue without pissing off existing subscribers - Pluto TV

Pluto TV was a hell of a purchase by Viacom. Its a free ad supported streaming service which is expected to hit 1 billion in revenue by the end of the year. They took it from 340m to 1 billion in a matter of 2 yrs.

Netflix can re-brand this free add supported service and start running shows to attract paid subscribers.

Bear case:

The only reason this wouldn’t happen is Netflix doesn’t have the cash to buy Viacom. Otherwise, they’re stupid not to.

TLDR;

Netflix should buy Viacom, that’s the only way they’ll continue to grow.