Will Netflix Acquire Roku? Mergers and Acquisitions Explained

How Did Roku Stand Down $2 Trillion Alphabet in YouTube Dispute?

After months of standoff, brand-agnostic streaming provider Roku has finally gotten YouTube back after Alphabet backed down.

It was the bottom of the ninth and Roku’s (NASDAQ: ROKU) staring contest with YouTube parent company, Alphabet (NASDAQ: GOOG), has finally ended. 

But amid this game of cat and mouse between the two streamers, which has lasted months, why did Alphabet — you know, the $2 trillion company behind Google — blink first?

Roku’s going places!

Let’s do a quick recap for those of us who are a little lost: 

  • Back in April, Roku and Alphabet entered negotiations for a renewed deal.
  • The deal would see YouTube TV continue to be streamed on Roku’s brand-agnostic platform. 
  • Roku didn’t like Alphabet’s terms, branding them as “predatory anti-competitive and discriminatory”.
  • In October, Alphabet threatened to pull YouTube off of Roku’s services from December 9th — the dispute was even brought before Congress. 
  • Now, it seems a last-minute deal has been made. 

Though financial details haven’t been disclosed, we know that it is a multiyear deal that will see YouTube and YouTube TV kept on Roku’s streaming platform for its 56.4 million subscribers. 

Not only is it great news for Roku, which would likely have lost subscribers due to losing YouTube — the world’s most-used streaming service — but it is massive for its advertising revenue. Roku takes a cut of advertisements to sell to its customers in each carriage deal it negotiates. YouTube is also the second most visited website on the internet:

That’s a lot of potential ad revenue. 

It’s a big win for the ‘little guy’. Some of it may be to appease the antitrust regulators, but a lot of it could be that Alphabet sees a lot of potential in Roku, which has become a powerhouse negotiator in recent years. When the world’s most-powerful website backs down, investors should take notice.

And, if anyone thought that Roku didn’t have any pulling power before, they do now.

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