With everyone getting into the streaming game, the battle for market domination is just beginning. The first move has *reportedly* been made by Netflix. It comes after Roku (ROKU) saw its shares spike by 12% on Wednesday, following on from a report that stated that Netflix (NFLX) was eyeing up a deal for the streaming aggregator. The logic behind the deal stems from the recent closing of the trading window for all employees, which stopped them from selling any of their vested stock.
The rumoured move has split the debate amongst analysts, with some seeing it as a necessary move from Netflix whilst others scoffed at the deal, citing Netflix's recent stock bloodbath after a few rocky quarters.
However, the timing could be advantageous for both parties, with Roku's valuation dropping below $13b as of Tuesday's market close, making the acquisition more appealing than a year ago, and Netflix looking to explore advertising after increased competition and subscriber losses. Picking up Roku, therefore, makes it ideal, especially as it already has a robust advertising business, one that brings in more bucks than its hardware business.
Why it matters
Until anything concrete comes out from either side, there will be a lot of posturing from analysts. In a crowded tech and streaming market, where everyone is jostling for consumer attention, Netflix could catapult itself back into relevancy by picking up Roku. If only for the simple fact that Roku commands more screen real estate for a lot of streamers. Food for thought.
