Is Roku for Sale?

May 31, 2022

The rumor mill is swirling right now that Netflix may be in the market --- and could even be close --- to buying out a major streaming market competitor. That competitor? Roku. A deal like that would absolutely rock the cord-cutting industry, but could also have some negative consequences for cord-cutters everywhere.

What If Netflix Buys Roku?

As surprising as it might seem, big mergers in the cord-cutting market don't happen that frequently. There are some reasons for that. One is that mergers cost a ton of money. The other issue is that most streaming providers aren't making bank; it's a slim margin industry. The small start-ups don't have the cash to buy out competitors, leaving on the big guys to decide when or if it's the right time to buy. That's why it'd be a pretty major move if the undoubtedly biggest provider in this space (Netflix) bought out the biggest device provider in this space (Roku).

1. Netflix Buying Roku Would Immediately Impact Roku Users

Netflix buying Roku would mean that Netflix has complete control over the most popular streaming device on the market.

Just over 50%

of streaming TV users have a Roku connected to their TVs or have a Roku-branded TV. If Netflix were to buy the company, it would mean Netflix has control over the largest connected TV device. In that scenario, Netflix would hold some significant cards over its competitors by collecting the same type of data that Roku collects on its competitors' usage stats. It could also kick competitors off the app by imposing strict and unfair requirements.

2. Don't Expect the FTC to Sit Idle

If Netflix tried to buy, say, Peacock, it'd likely have an easy time. But given what Roku does, and the insights that it gets into app users, the FTC would likely be taking a strong look into whether a Roku purchase would violate any antitrust laws. Netflix would have a large number of hurdles to hop over to get approval on that purchase. It's possible that the FTC would only allow that deal to go through if Netflix divested itself of data collection on user app usage --- which would be one of the primary reasons Netflix would want to buy Roku in the first place.

3. If the Deal Does Go Through...

Not financial advice, but I hope you bought some Roku stock.

This Week's Streaming Guide

1. HBO Max 'Father of the Bride' Remake Premieres

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3. A Snoop Dogg Comedy Special? Yes, Coming to Netflix

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4. John Lithgow and Jeff Bridges Come Together for FX Crime Drama 'The Old Man'

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