The news: Rumors of a potential acquisition by Netflix swirled internally at Roku on Wednesday after a report from Insider, giving the stocks of the two embattled media companies a bump and prompting speculation about how the theorized deal would change the streaming landscape.
Advertising, content opportunities: Roku’s vast suite of advertising tools would help solidify Netflix’s recently announced maiden voyage into advertising, which has already been plagued by skepticism and rushed timelines.
The setbacks: Advertising and content may make Netflix and Roku seem like a natural fit, but Roku’s hardware business would throw Netflix into an entirely new market at a time when it is refocusing on its core business.
Will there be a merger? Signs point to no. Roku’s lower stock price might make an acquisition seem appealing, but it’s unlikely that Netflix would be willing to invest in an expensive merger with a long lead time when other moves show an effort to cut costs and rush out new features.