Business Insider published quite the rumor on Wednesday, reporting on scuttlebutt that video-streaming hardware kingpin Roku could potentially be acquired by Netflix.
The story doesn’t offer much evidence that Netflix might actually buy Roku. No sources are claiming that the two companies are even in negotiations, let alone close to any kind of deal. Instead, the story cites “internal chatter” from Roku employees, who appear to be speculating after Roku abruptly stopped them from selling their vested stock.
But it’s an interesting idea to think about. For one thing, Roku got its start as a project inside of Netflix, and only reached the market as a Roku product in 2008 after Netflix decided to make its streaming service platform-agnostic.
But while Roku is best known for its cheap streaming players and smart TV software, it’s primarily an advertising company from a business standpoint these days, making more money from software licensing and advertising than from hardware sales. And Netflix is scrambling to get into the ad 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 on building a connected TV advertising business. As of last quarter, Roku had 61.3 million active accounts—presumably including some who aren’t Netflix subscribers—and it has deep insights into what users are watching and searching for across its entire platform.
Last year, Roku also acquired Nielsen’s Advanced Video Advertising unit, which includes technology for inserting targeted ads into content. It 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 also giving it more data and greater reach.
What it would mean for Roku
If Netflix did acquire Roku, it probably wouldn’t change much for users in the near term.
