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Why is Netflix CEO Reed Hastings Leaving Microsoft?

Why is Netflix CEO Reed Hastings Leaving Microsoft?

In an attempt to focus on his own ailing firm, Netflix (NASDAQ: NFLX) Chief Executive Reed Hastings announced that he will no longer serve on Microsoft's (NASDAQ: MSFT) board.

"Reed has been a terrific board member, and his insights and experience have really helped guide us through a critical period of transformation for both Microsoft and the industry," Steve Ballmer, CEO of Microsoft, said in a statement.

"I'm thrilled to have served on the board at such a pivotal time for Microsoft, including the development of Windows 8, Windows RT and Microsoft Surface, which will bring exciting new opportunities for customers and the industry as a whole," added Hastings.

Hastings, who currently serves as the company's lead independent director, joined Microsoft's board in March 2007. He said that he is leaving to "reduce the number of boards I serve on, so that I can focus on Netflix and on my education work." But if he wants to focus on Netflix and his education work, why did he choose to join Facebook's (NASDAQ: FB) board last year?

The answer might involve the future of both firms as well as Microsoft. While the relationship between Netflix and Microsoft is relatively minor (ex: Xbox 360 users can download the Netflix app), Facebook could be a critical part of Netflix's long-term social media strategy. The company would love to fully integrate its streaming video service with Facebook, but it is not currently allowed to do so in the United States.

There have also been rumors that Facebook will acquire a portion or all of Netflix to bolster its own streaming video efforts.

Meanwhile, Microsoft has been working with Barnes & Noble (NYSE: BKS) on a strategic partnership. Thus far, the focus has been on books. But the two entities formed a new subsidiary for digital content, Nook Media LLC, which could one day offer a Netflix-style service for movie rentals. In the meantime, Barnes & Noble is building a service that sounds very similar to iTunes.

If Microsoft intends to increase its efforts to compete with Netflix -- either directly or through its partnership with Barnes & Noble -- there could be a conflict of interest for Hastings to stay on Microsoft's board. That may have provided him with another reason to leave.

Follow me @LouisBedigianBZ

Posted-In: Microsoft Netflix Reed Hastings Steve BallmerNews Rumors Management Tech Best of Benzinga


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