Netflix could buy the streaming service Roku

It’s tough times to be in the video streaming business. Netflix, the company that, as we may say, pioneered the whole thing, is now rapidly losing subscribers and is trying to find as many ways as possible to keep its users.

The streaming giant is under such pressure from its competitors that it revealed its intentions to launch an ad-supported plan soon, despite refusing to do so for years. And now, a new report hints that Netflix might use the streaming service and TV box manufacturer Roku for its new ad-supported tier. But how? Well, by just buying Roku.

In recent weeks, employees at Roku have been discussing the possibility of Netflix buying the smaller streaming service. This “possibility” comes after Roku’s stock dropped by 80% since July last year.

Interestingly, according to people inside Roku, the company has prohibited its employees from selling their company stock. Of course, the reasons for doing that could be many, but usually companies do that before releasing important information to prevent inside trading. Could that be because of a potential buyout? It’s a possibility, yes.

However, it should be noted that there is no official word about Netflix acquiring Roku to back up the claim of a possible acquisition. But according to experts, this is precisely the perfect time for a buyout.

First of all, Roku’s valuation is now below $13 billion, which makes it very attractive for a buyout. Also, Roku’s video-advertising platform generated $647 million in first-quarter revenue. To understand how big of a deal that is, Roku’s video advertising generated seven times more profit than its video-streaming boxes and other devices that the company sells. In a potential acquisition, Netflix could use Roku’s know-how and video-advertising platform to improve its ad-supported plan, thus generating more profit.