Streaming service provider Roku (NASDAQ: ROKU) shot up on Wednesday after making a big announcement with Google (NASDAQ: GOOG).
The company has been having an ongoing dispute with the tech giant, specifically in regards to whether Roku should keep Google’s YouTube app on its platform or not. However, in a surprising twist, the two companies have come to a multi-year agreement that would benefit both parties.
The deal would let Google keep its YouTube and YouTube TV applications on Roku’s streaming platform. Previously, the two companies have been in dispute regarding the apps, with Roku threatening to remove both applications back in 2020. In turn, Google gave Roku until the end of December to come to a new agreement, citing that Roku’s loss of YouTube, the world’s largest streaming app, would hurt them a lot more than Google would be if Roku gave up their partnership.
Roku claimed that Google manipulated its search results to favor YouTube over the Roku platform. The claim was alarming enough that it even attracted the attention of Congress, already eager to combat the growing power of big tech companies. Despite responses from tech companies to the contrary, most regulators on Capitol Hill largely suspect companies like Google of abusing their near-monopolistic powers.
“We’re happy to share that we’ve reached a deal with Roku to continue distributing the YouTube and YouTube TV apps on Roku devices,” said Mariana De Felice, a spokesperson for YouTube . “This means that Roku customers will continue to have access to YouTube and that the YouTube TV app will once again be available in the Roku store for both new and existing members. We are pleased to have a partnership that benefits our mutual users.”
Overall, the announcement is good news for both companies. Roku would likely have been more hurt if the deal fell apart than Google, as many Roku subscribers would leave if they couldn’t use the YouTube app. Additionally, other streaming competitors, like Amazon Fire TV and Apple TV, both have YouTube as well. It’s one reason why some analysts were largely skeptical that Roku would even remove YouTube in the first place.
Despite Roku’s position, the company has a history of being a tough negotiator. In the past, Roku has managed to reach new agreements with NBC and HBO shortly after launching their own apps.
Shares of Roku were up over 18% on Wednesday following the news. However, even taking these gains into consideration, Roku has been an incredibly poor performer this past year. Shares are down more than 19.5% since 2021 began, compared to the 20%+ gain seen by the Nasdaq of the same period. Unlike most other streaming services, analysts are a lot less bullish on Roku than they are for Apple or Amazon’s own streaming platforms.
Roku Company Profile
Roku is the leading streaming platform in the U.S. by hours watched with under 59 billion hours of content streamed in 2020. The firm’s eponymous operating system is used not only in Roku’s own hardware but in co-branded TVs and soundbars from manufacturers like TCL, Onn, and Hisense. Roku generates revenue from advertising, distribution fees, hardware sales, OS licensing, and subscription sales. – Warrior Trading News
