Netflix buying Roku would make a lot of sense


Business Intern released a whole rumor on Wednesday, reporting on scuttlebutt that video streaming hardware kingpin Roku could potentially be acquired by Netflix.

History doesn’t offer much evidence that Netflix might actually buy Roku. No source claims that the two companies are even in negotiations, let alone close to any kind of deal. Instead, the story cites “inside chatter” from Roku employees, who appear to be speculating after Roku abruptly stopped them from selling their acquired shares.

But it’s an interesting idea to think about. For one, Roku debuted as a project within Netflix and only hit the market as a Roku product in 2008 after Netflix decided to make its streaming service platform independent. form.

But while Roku is best known for its cheap streaming players and smart TV software, it’s mostly an advertising company from a business perspective these days, making more money. from software licenses and advertising than from hardware sales. And Netflix is ​​scrambling to enter the advertising business as its subscription growth hits a wall. An acquisition would make a lot of sense.

What’s in it for Netflix

By acquiring Roku, Netflix wouldn’t have to start from scratch to build a connected TV advertising business. As of last quarter, Roku had 61.3 million active accounts, likely including some who are not Netflix subscribers, and it has deep insights into what users are watching and searching for across its platform. .

Last year, Roku also acquired Nielsen’s Advanced Video Advertising unit, which includes technology for inserting targeted ads into content. He previously acquired ad tech company Dataxu, which helps marketers buy digital video ad campaigns. Buying Roku would give Netflix a shortcut into the ad tech business while giving it more data and greater reach.

What this would mean for Roku

If Netflix acquired Roku, it probably wouldn’t change much for users in the short term.

For Roku, streaming devices and smart TVs are just a way to gain more eyeballs for targeted ads, so Netflix is ​​highly unlikely to disappear from other streaming platforms.

On the contrary, it would lead to a wider distribution of Roku content. As Roku invests more in original Roku Channel content, one could imagine Netflix making this content available to its subscribers, perhaps even ad-free.

What’s less clear is how a Netflix acquisition could affect more nascent aspects of Roku’s business, such as its forays into home audio or its line of smart TVs. A larger, more platform-independent company may have less interest in ambitious new hardware projects.

Switzerland is already dead

That said, the Roku platform could also become a much bigger storefront for Netflix content if the two companies merge.

In the past, Netflix has resisted certain features on streaming devices that make it easier to browse its content from outside the Netflix app. Its original programming disappeared from Google TV home screens at the end of 2020, and it never participated in the universal “TV” guide app on Apple TV.

On Roku’s mobile app, you can’t add Netflix shows to the “backup list” for convenient access. If Netflix acquired Roku, you might finally have easier access to Netflix content right from the home screen, at least on Roku devices.

This might conflict with the long-held notion that Roku is a neutral party in the streaming wars, but in reality Roku lost its neutrality a long time ago. The Roku Channel’s free content already enjoys heavy billing on Roku devices, being heavily promoted in the “Featured Free” and “Live TV” sections of the home screen. Meanwhile, Netflix already gets its own special treat on Roku: if you do a voice search in Netflix, the results come only from Netflix and bypass Roku’s system-wide search menu.

All of this means that the companies are already quite closely aligned. The biggest difference between them has been their business model, with Netflix focusing on paid subscribers and Roku focusing on ads. As Netflix fundamentally rethinks the way it makes money, the company it started as a side project would be a no-brainer to turn to for help.

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