There were rumors that Roku and Netflix might join forces, and this made the stock price go up by 9 percent
At the auction on June 8, the stock of Roku Inc. (ROKU), which makes software and hardware for streaming video, went up to $101.88. Rumors about a possible merger were the reason. What could be the point of this deal? The news was published in the magazine Business Insider. It said that Roku employees are talking about a possible sale of the company in the near future. There are no official reports, so the employees can only guess based on the fact that they can’t sell their shares.
This is often the case when getting ready to announce an M & A deal. As soon as the article came out, people started talking about a possible purchase. Netflix Inc., a company that lets people watch TV online, is one of the companies that might want to buy the Roke business. If that is the case, an official message could send ROKU prices up. It’s not clear why Netflix would want to buy Roku. The main point of interest may be the Roku advertising platform, which gives Netflix more ways to make money from its content.
Roku has more than 60 million users, which will give Netflix a lot more advertising opportunities. At the same time, Netflix may find it more important to make new content to keep and grow its audience. At the same time, buying Roku might not work out so well. The fact that the Roku platform is independent and lets you watch all Internet TV services is a big part of why it is so popular. If Netflix buys Roku, it’s possible that competitors will leave the platform, which would mean that Roku’s advertising audience would drop by a lot.
The competition between streaming services is very different from that between cable TV services. Almost all of the competition is about content. Users of Internet TV are very mobile. They sign up for the service to watch their favorite shows, but they can just as easily drop the service for a competitor. Netflix can’t spend more on content than, say, Disney, so it may be more important for the company to update the way it makes content so it can make new, interesting shows.
