Netflix’s Potential Roku Takeover Drives Surge In Interest For Device Maker

Talks of Netflix potentially buying Roku caused the streaming device maker’s stocks to jump from US$93 to US$105.10 on Wednesday, with its share closing at US$103 that day, Fortune reports.

Furthering the rumors, Roku also closed its windows for employees to trade stock. This usually happens only when companies are about to release game-changing information relating to their business model, or to prevent insider trading. 

So, why would streaming giant Netflix want to acquire Roku? It’s no secret by now that Netflix is thinking about adding advertisements to its platform as revenue falls and competitors rise. A drop in its subscribers may also be what is pushing the company to turn to advertisements.

Advertisements will most likely be introduced as a cheaper tier for those who are patient enough to sit through them. According to Insider (via TechRadar) Roku has reported earnings close to seven times in profits from advertisements than they do from the actual sales of their streaming boxes—an attractive number to say the least.  

Roku also manufactures hardware streaming players that are in competition with Netflix.

With Roku’s apt ability and skills to add advertisements to streaming shows, it’s no wonder Netflix seems heavily interested in buying it over. If the merger does go through, this would herald the beginning of ads on Netflix.  

[via Hypebeast and TechRadar, Photo 241955354 © Rafael Henrique | Dreamstime.com]