10 JUN 2022

Could Roku be Netflix's best next move in the streaming wars?

Following the rumor that Roku could potentially be acquired by Netflix, Roku’s price went up as much as 13%, after a tough year that has seen the company's stock drop by about 80% since last July.

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Netflix could be in negotiations to acquire Roku, according to Business Insider. Following this rumor, Roku’s price went up as much as 13%, after a tough year that has seen the company's stock drop by about 80% since last July. To further fuel these rumors, Roku unexpectedly closed its trading window, which is the timeframe in which employees are allowed to trade vested company stock. Such actions are normally reserved for when a company is about to release details that could have a big impact on its stock price and to avoid insider trading.

American company Roku is best known for its cheap streaming players and smart TV software. Their devices offer access to streaming media content from online services. The first Roku model, which was introduced in 2008, was in fact developed by CEO and Co-Founder Anthony Wood in collaboration with Netflix. At that time, Netflix was looking to develop a streaming device to help its users take their living rooms over-the-top in the pre-smart TV era.

While Roku is best known for its streaming players, the company makes more money from software licensing and advertising than from hardware sales. Giving that Netflix is willing to enter into the ad business with its upcoming ad-tier, an acquisition would make sense, as the company would not have to start from scratch on building a connected TV advertising business. Roku remains the leader in TV streaming and grew revenues by 39% in its fiscal first quarter of 2022 while adding 1.1 million new active accounts in the period to bring the total active account to 61.3 million users.

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