11.3 billion is Roku’s market cap.
2.7 billion was the revenue in 2021.
242 million was the profit.

Roku currently has 61 million users and now there’s a big rumor Netflix is going to buy them.

Here’s why that’s not going to happen and if it does, it’s a bad idea.

First up, some financials on Netflix.

• 81 billion is what they are currently worth.
• 259 billion was the market cap this year.

Netflix is down 69% from the start of this year.

• 221 million is Netflix total subscriber count.
• 29.7 billion was revenue for 2021.
• 5.1 billion was the profit.

Netflix has for subscribers, revenue and profits had massive growth, but as a stock it’s less exciting.

Disney+ has 138 million subscribers, since launching in late 2019.

At the current pace, it’s possible Disney+ beats Netflix in subscriber count in the next 1-2 years.

Disney would beat Netflix in streaming, while also having theme parks, a massive merchandise business, networks, a gaming division and more.

Disney will be much larger revenue wise and beat Netflix at its core business.

This is a huge scare for Netflix.

This makes a lot of people believe they want a large acquisition such as Roku to invent a new business to improve.

This goes into the second point of why that likely won’t happen and also be very silly.

Roku has 61 million users.
The majority of Roku users are US based.

Netflix has 74.5 million US users.

It’s extremely unlikely Roku has any customers who don’t currently use Netflix or haven’t at least made that decision.

The other issue is originals.

Roku has some original content, which is used to try and get customers to buy it, but nothing that impressive.

Did a quick check on Roku’s website and when the biggest thing they are marketing is Reno 911 for originals, I don’t think that’s enticing for Netflix.

Amazon bought MGM for 8 billion and got the rights to James Bond, RoboCop, Legally Blonde, Stargate and many others.

Buying Roku would be a 10-14 billion dollar purchase and just isn’t worth it for the originals compared to what other studios have.

And final thing is cash on hand.

6 billion dollars was Netflix reported cash on hand last quarter.

Netflix buying Roku would spend over half a years content budget and it’d cost about double what they have cash.

They could buy with stock, but at this point, it’d be one eighth of the company.

Final thoughts

Netflix needs work to get it back, but that battle comes with finding new popular franchises, while also expanding the ones they have into games, merchandise and theme parks.

The path won’t be by branching into a hardware product they have no experience in, which adds no value to their core product and makes them an Amazon competitor.

If Netflix does decide to buy Roku, I’d put that another nail in the coffin over a savior.

Yahoo in the 90s and 2000s bought tons of companies.

• Broadcast .com for 5.7 billion.
• GeoCities for 3.6 billion.
• Overture for 1.6 billion.

Over twenty buyouts passed 100 million dollars and none of them added to Yahoo’s core business and all went south.