Streaming platform Roku saw its share price jump as much as 10% on Wednesday as internal rumors began to swirl that Netflix might be looking at an acquisition of the streaming platform most known to consumers for TV sets and streaming boxes.
Roku's reinvention
For much of its existence Roku kept the lights on primarily through sales of streaming boxes and hardware, which in 2015 was almost 85% of the company's revenue. But over the best part of a decade, Roku has steadily built an enormous platform business, selling ads and some content distribution services to its 60 million active users. The physical boxes may not be the sexy part of its business anymore, but they've proven a key gateway to building the high-margin advertising business.
Advertising appeal
That advertising-driven division is now the vast majority of Roku's business, which is why on paper it might seem fitting for Netflix — which is very publicly looking to get into ad-supported streaming — to explore acquiring Roku.
That argument has gained weight recently as Roku's share price has plummeted in the last 10 months. Last summer Roku was valued at about $63bn... now it's closer to $14bn.
