Facebook to Acquire iLike and Flixster?
Posted by Nick O'Neill on November 12th, 2007 10:40 AMDare Obasanjo has written a post suggesting that Facebook should acquire iLike and Flixster. His argument that iLike and Flixster hold valuable data that Facebook would love access to in order to exploit via their Social Ads system makes sense. Dare also suggests that iLike and Flixster are doing horrible jobs of making user actions monetizable.
While in theory, this make a lot of sense, the real problem is in the numbers. Both iLike and Flixster are looking to exit somewhere in the hundreds of millions of dollars range. Given that Facebook has around half a billion dollars in cash, it would be feasible to acquire these companies but is it worth investing close to 50% of their available cash? With the addition of some valuable Facebook shares, the numbers could begin to make sense. Additionally, given Facebook’s recent move into music and movies via their new pages system, it makes even more sense for an acquisition to take place.
Eric Eldon suggested that iLike could be sitting on a web music empire. The only problem is Facebook’s decision to eliminate the majority of the 170,000 artist pages automatically created by iLike. Their rationale? Only brand owners can create pages. From this standpoint, it would make a lot of sense for Facebook to acquire these two companies. Both entities hold a massive amount of data about bands and movies, both of which Facebook is looking to promote. Only time will tell how this all pans out. Do you think Facebook would acquire Flixster or iLike?
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but i'm not sure FB has to do those deals, or whether they even make sense. both companies are valuable, but FB probably gets more bang for its buck acquiring companies with horizontal benefit to the entire platform, rather than vertical communities that only benefit a particular area.
ideally, FB should figure out a way to let *all* apps in a vertical benefit from being on FB platform, and share/create revenue / benefits with them & advertisers.
otherwise, acquiring companies will alienate the others in that segment. of course it's not a bad idea to do acquisitions that add lots of value to your users, but as soon as that happens they're basically declaring that vertical dead to other competition... not such a great strategy for a platform, unless the vertical is completely played out.
much more important for FB to figure out a shared-benefit monetization strategy more than they need to acquire vertical platform winners. acquiring search or advertising or payment technology makes a lot more sense than vertical apps.
my .02 anyway,
- dave mcclure
http://500hats.typepad.com
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