There’s Buzz That Netflix Could Acquire Roku
Christian Hetrick is dot.LA's Entertainment Tech Reporter. He was formerly a business reporter for the Philadelphia Inquirer and reported on New Jersey politics for the Observer and the Press of Atlantic City.
With Netflix racing to launch ads on its streaming service, a new report suggests that the company could get some help by acquiring a leader in video advertising: Roku.
Employees at Roku are abuzz with talk that the streaming hardware firm could be bought by Netflix, Insider reported on Wednesday. The chatter reportedly heated up after Roku shut down its trading window for employees and barred them from selling their vested stock—a move that companies typically make before releasing information that will affect their stock price.
Representatives for Netflix and Roku declined to comment on the report to dot.LA.
Although Roku is best known for streaming players that allow consumers to access subscription services like Netflix and Hulu on their TVs, the company has also developed a robust ad platform that earned $647 million in first-quarter revenue. After losing subscribers for the first time in more than a decade last quarter, Netflix is now jumping into ad-supported streaming—playing catch-up with rivals who have already offered cheaper subscriptions that include commercials.
Such a deal would also be a reunion of sorts. Roku initially started as a product inside Netflix before it was spun out more than a decade ago after Reed Hastings, the streaming giant’s co-founder and co-CEO, opted against getting into the hardware business. These days, there’s no shortage of streaming companies selling both content and hardware; Amazon and Apple each offer both streaming players and services, while Comcast now sells smart TVs along with its Peacock streaming service.
Not everyone thinks a reunion between Netflix and Roku makes sense, however. Rich Greenfield, an analyst at tech, media and telecom research firm LightShed Partners, told CNBC on Wednesday that such an acquisition would be “absurd” for Netflix.
“Netflix’s core business is not advertising, will never be advertising,” Greenfield said. “To spend $20 billion, let’s just say, to buy Roku to make advertising this huge piece of the company would seem very, very out of character.”
Netflix’s stock price is down 66% since the start of this year, closing Wednesday’s trading at $202.83 per share. While Roku shares have similarly plummeted 55% year, the company’s stock climbed 9% Wednesday following the Insider report, closing at $101.88 per share.
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Christian Hetrick is dot.LA's Entertainment Tech Reporter. He was formerly a business reporter for the Philadelphia Inquirer and reported on New Jersey politics for the Observer and the Press of Atlantic City.
