What you need to know
- Roku employees have reportedly discussed a potential acquisition from Netflix.
- Netflix is preparing to launch an ad-supported tier to bring subscribers back to its ailing platform.
- Roku has a robust ad platform that may attract Netflix as it prepares its own ad-supported tier.
- Roku got its beginnings at Netflix as a company that was spun off to create streaming devices.
While Elon Musk hones in on his acquisition of Twitter, there are rumors of another major acquisition in the works between Netflix and Roku.
A report from Insider suggests that Roku employees have been talking about a potential Netflix takeover for weeks. This is in response to the company's plummeting stock price as demand falls for streaming devices. Insider's sources remain unnamed but apparently close to the matter.
Roku declined to comment, and Netflix did not immediately respond to our request.
The report states that while a potential takeover could help Roku's struggling business, it would also be an ideal move for Netflix as it prepares to launch an ad-supported tier. The streaming platform recently saw its first subscriber loss in a decade, losing 200,000 subscribers in Q1, and is on track to lose 10x as much in the current quarter.
An ad-supported tier is one possible way that Netflix hopes to win users back, introducing a cheaper subscription as its other plans continue to rise in price. It's a tactic other streaming platforms have already adopted and has proven successful. Roku already has a robust ad business which could be just what Netflix needs to regain its footing.
While an acquisition between the two would represent a significant move for both parties, it wouldn't be too farfetched. While Netflix has steered clear of hardware, such was the case of ads until now. Additionally, Roku got its beginnings at Netflix in the early 2000s, when founder Anthony Wood worked on a streaming device while at Netflix. However, before a product was launched, the company was spun off over fears that it would impede Netflix's availability on competing streaming devices.
Netflix now finds itself in a tight spot, and it seems that bringing Roku back in could be the answer to its streaming woes. Of course, for now, it's all just speculation, and such a takeover may never actually happen.
