Netflix rumored to buy streaming devices and smart TVs maker Roku

Following a difficult period for both firms, Business Insider reports that Netflix is in talks to acquire Roku. In the streaming television market, Netflix and Roku are engaged in a battle with large and small rivals. After years of growing its subscriber base every quarter, Netflix has recently seen a significant loss in subscribers. Meanwhile, Roku's stock price has dropped dramatically, leaving it vulnerable and competing against larger rivals. According to Business Insider, as a result of these factors, Netflix may buy Roku.

The partnership makes sense for Netflix since the company is looking to expand and diversify its revenue sources rather than solely relying on subscriber growth. Roku's advertising platform, in particular, is a tempting carrot for Netflix to pursue. “It makes sense with where Netflix wants to go," said a technology investment banker. “And it makes sense in this particular scenario because everyone else is wondering what happened to their value?”

Even within Roku, there appears to be support for a potential merger, with one senior-level employee claiming that the two firms "align well in terms of culture, business, and present valuation." A deal may be the best option for both businesses to stay competitive in an increasingly competitive market. However, a transaction like this would have a huge impact on the competition.