Report: Could Netflix Buy Roku to Help Boost Ad-Supported Plans?
Report: Could Netflix Buy Roku to Help Boost Ad-Supported Plans?
Netflix may be somewhat beleaguered at the moment, after losing subscribers in the first quarter of the year, but a new report says that the streaming giant might be looking to make a rather major acquisition.
Insider reported on Wednesday that there has been increased speculation around the possibility that Netflix could buy Roku amongst the employees of the latter company. Roku is the leading television operating system provider in the United States and has developed a robust advertising platform, as well as a growing original content business. But Roku, like Netflix, has seen its stock price plunge in recent months.
The Insider piece primarily cites the climate inside Roku, where employees are “buzzing about the possibility of an acquisition,” and “employees at Roku have been discussing the possibility of a Netflix acquisition in recent weeks” and that such talk “has become the focus of internal chatter at Roku.”
It’s not clear at this point whether such merger talks have taken place and, if so, how substantive they are. Neither company had any comment to the news outlet.
Roku’s dropping stock price, per the report, has made it harder for the company to compete with rival tech companies. Roku also recently “closed the trading window” to prevent employees from trading their vested stock.
As for the question of how likely such a merger is to take place, opinions seriously differ. Some quoted by Insider, including a technology investment banker, pointed out that the timing would make sense since Netflix is about to launch an ad-supported tier and Roku has an increasingly successful advertising business. Such a deal would give Netflix access to a massive amount of consumer intelligence.
In addition, Netflix and Roku have long been associated with one another, as the first Roku product was developed in collaboration with Netflix, and the two companies have long partnered with each other.
However, one expert was much more skeptical that such a deal could happen. Rich Greenfield of LightShed Partners, who is one of the most seasoned and insightful analysts focusing on streaming was not convinced of the possibility:
Netflix is not buying Roku $NFLX $ROKU pic.twitter.com/676GMz4XiW
— Rich Greenfield, LightShed 🔦 (@RichLightShed) June 8, 2022
“Netflix’s core business is multi-platform subscription with focus being a key attribute,” Brandon Ross, also of LightShed, said on Twitter. “Advertising in success is 20% of it. Why take on a second streaming war (OS war) and enter the hardware biz for that?”
Another analyst told Insider that a Netflix/Roku merger could also raise antitrust concerns.
The deal would also put Netflix in possession of the free Roku Channel, at a time when it is preparing an advertising-supporting tier.
Netflix
Netflix is a leading subscription-based video streaming service that offers on-demand access to an extensive library of over 3,000 movies, 2,000+ TV shows, and a growing collection of acclaimed Netflix originals. Renowned for producing groundbreaking content, Netflix has become a cultural powerhouse with hit originals like “Stranger Things,” “Wednesday,” “Squid Game,” “The Crown,” “Tiger King,” “Bridgerton,” “The Witcher,” and “Black Mirror.”