Netflix does not go through its best moments. The red giant of streaming has faced its first drop in the number of subscribers and has opened the door to models with which it had perjured itself that it would not experience: advertising. It may be a cold more than a serious illness as it has been painted, but what is certain is that the model of wild growth on which it was based has caught the flu.
In this context, beyond the company’s own explanations, the box of speculation has been opened about what Netflix could do to try to overcome its crisis and there, the possibility of acquiring Roku, has become one of the first.
Roku Inc. is a company that has positioned itself at a hybrid point in the so-called streaming wars: It produces software and hardware on which many OTT solutions fit and, due to this panoramic vision, it could be the perfect Netflix partner.
Netflix has the content, Roku the devices
Roku, present in the United States and most of Latin America (in Mexico it has faced sentences against it due to a lawsuit from Televisa because its devices favored piracy), but it is not Spain. Your devices and your software solve the following problem: It allows users to seamlessly watch thousands of channels and all available platforms in one place, and (and here would be Netflix’s main interest) it serves as an intermediary between content providers and advertisers to reach that audience.
Roku generates revenue primarily through advertising salesand later with the sale of their own devices, from a box still stick similar to Amazon’s FireStick. Over time, it has also created and launched its own Roku-branded television.
The story behind Roku
Currently, more than 51 million people access Roku services each month, from which more than 10,000 channels can be accessed on its platform.
Headquartered in San Jose, California, Roku was founded in October 2002 by Anthony Wood, who today leads the company as its CEO. Roku means “six” in Japanese, to symbolize the fact that it is the sixth company that Wood founded.
Wood is what people would describe as a handyman. From a young age (he was born in Manchester, England, but his family later moved to Georgia and Texas), he experimented with various hardware components.
After spending a year in the Netherlands as an exchange student, where he took computer classes, among other things, Wood returned home to Texas and taught himself to code.
After graduating with a degree in electronic engineering, Wood tried various initiatives before launching a software company called iBand in 1995. The company’s flagship product was an intuitive and easy-to-use editor for HTML-based web pages. A year later, he sold it to Macromedia for $36 million.
The deal made Wood a millionaire at age 30, but forced him to stay with Macromedia. another year as vice president of Internet creation for the company.
After that, he went out and laid the foundations of Roku. The idea for his new company came from the frustration of missing episodes of his favorite series, Star Trek: The Next Generationwhen they were broadcast on television.
To solve that problem, it developed one of the first digital video recorders (DVRs) under the ReplayTV brand.
At first, Wood financed the company single-handedly. He later brought in other investors, such as Marc Andreessen, the creator of Netscape, later known as the Andreessen Horowitz investment firm.
ReplayTV’s first product hit the market in 1999 and would cost about $1,000. Unfortunately, its biggest rival, TiVo, was able to undercut the market by selling DVRs for $500. After two years of losses, Wood was forced to sell ReplayTV. The consumer electronics company SONICblue ended up buying the company for $42 million. Wood, again, stayed on to help run ReplayTV from SONICblue.
Making it easy to watch Netflix catapulted Roku
But that would lead him to work on the concept of Roku, which would be his sixth company. And that’s where the paths with Netflix begin to unite: He called the CEO and founder of Netflix, Reed Hastings, and invited him to lunch. Rather than invest in Roku, Hastings asked Wood to join Netflix as vice president of Internet television in 2007.
The goal was to guide Netflix, which was developing its own streaming player (codenamed Project Griffin), through all the necessary production steps.
In the end, Wood realized that he would rather work at Roku than help Netflix, so he ended up leaving the position after 10 months. Netflix, for its part, decided to turn the Griffin Project into Roku, and even became the company’s first major investor, although it sold its shares a few years later.
In the end, Wood had learned from his mistakes, launching the device at an affordable price of $99. At its launch, the product was only capable of streaming Netflix content: it was the Roku Netflix Media Player that was released in 2008.
That would change soon. In a matter of two years, Roku was able to add more than 50 more channels to its platform. In addition to adding more channels, Roku expanded its product line, for example by introducing the Roku Streaming Stick (with the ability to even play games like Angry Birds) in 2012.
That same year, Roku managed to expand into its first foreign market by introducing two of its streaming players in Canada, Ireland and the United Kingdom.
As Roku grew, the competition lurked as well. Amazon, in 2012, even made an offer to buy Roku. Wood turned it down, deciding to raise $45 million from News Corp. and Sky UK instead.
However, because its streaming devices were priced so cheaply, Roku essentially sold them at cost. The company, therefore, had to find more profitable ways.
In 2013, Roku announced that it would be partnering with other tech manufacturers to bring its operating system to their devices. Specifically, it would collaborate with companies like Hisense, TCL, Coby Electronics and 11 others to get its operating system running on their next smart TVs. These companies would pay a license fee to Roku.
Netflix and Roku: A possible alliance?
This move became an overwhelming success. In less than two years, Roku managed to capture more than 8% of the US smart TV market. Roku continued to thrive, largely because it remained platform independent.
The year 2020, in particular, allowed the company to grow tremendously with the COVID lockdowns. The company was able to add more than 14 million accounts in 2020 alone.
In recent times, rumors have emerged that the company would finally start creating its own content, which would be distributed by The Roku Channel. Those speculations became a partial reality when, in April 2021, Roku announced that it would turn Quibi content into Roku Originals (available on The Roku Channel). Later, it added more shows and even began work on some 50 original scripted shows to be produced by Roku itself.
Today, more than 2,500 people work for the company, which has offices in more than 25 cities around the world. For now, the rumors about Netflix’s interest in Roku are just speculation but, it seems clear that it would be a fast track for Netflix to expand its much more expansive business in the consumption of content in the home.