Did you know: Roku was nearly a part of Netflix
A household name in the US, Roku is one of the best and most popular streaming devices out there. But did you know that Roku is almost a part of Netflix?
In fact, it was Netflix engineers who developed the first Roku device. It was scheduled to launch in 2007, the same year that Netflix launched its now ubiquitous video-on-demand service. But just a few weeks before this “Netflix Player” came on the market, the strategy changed and it was instead spun off into its own company.
Here’s the full story, but a bit of context first.
A bygone era
In today’s streaming-centric society, it’s easy to forget that things were very different in 2007. Netflix’s main business was mail-in DVD rental, and the whole concept of video streaming was still in its infancy. Even early versions of Vimeo and YouTube were just beginning to get off the ground. They were introduced in 2004 and 2005, respectively.
Unlike its main competitor, Blockbuster, Netflix saw the writing on the wall. When the writing for the DVD rental was on the wall, she started a video streaming service in early 2007. This was just before the launch of the first iPhone and long before our lives shifted to smartphones and digital platforms.
Netflix needed a new type of device to bring the fledgling video streaming service from subscribers’ computers to their televisions. DVR boxes like TiVo were commonplace at the time, but you could only record broadcast television locally – not stream it from a remote server.
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While Netflix’s streaming catalog slowly grew from the original 1,000 or so films on offer, the company secretly assembled an in-house team to develop this new streaming box. Under the pseudonym “Project Griffin”, a team of 20 engineers worked closely with the Chinese manufacturer Foxconn to prepare the device for launch.
The team had worked on the technology for years before launching the streaming service itself. According to a report by Fast companyNetflix initially toyed with the idea of a connected DVD player before settling on a dedicated streaming box. The key was affordability, of course, as the real goal was to bring Netflix to more households.
This device, called a Netflix Player, was designed to revolutionize the way people stream media. But just a few weeks before the launch, there was a big change in plans.
The birth of Roku
Reed Hastings, CEO of Netflix, understood the business side of streaming better than anyone at the time, and knew that releasing first-party streaming hardware would put Netflix in direct competition with its hardware partners. If Netflix was to remain neutral, it had to drop all dreams of its own streaming device.
In December 2007, Hastings shocked the company by announcing that the Netflix player would never see the light of day. At this point it was ready to go – the device was completed, marketing materials were being printed, and advertising was in the process of being shot.
The Netflix Player was ready to ship, with printed marketing materials and television commercials on the go.
Instead, the technicians and engineers who developed the streaming box would be outsourced to another company, led by Anthony Wood. Wood, then vice president of Netflix, founded Roku back in 2002, but it wasn’t until then that the company really took off.
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Netflix invested $ 6 million in the start-up, and the first Roku-branded streaming device was released in 2008. It was priced at $ 99, which sounds expensive compared to current streaming devices but was a lot cheaper than other options at the time. For example, the first Apple TV set-top box cost $ 300.
That thin veneer of separation allowed Netflix to continue talks with big manufacturers like Sony, LG and Samsung. Closing the hardware business expanded Netflix’s streaming service to millions of devices around the world.
Was it the right call?
Although it was controversial within Netflix at the time, the decision to kill the Netflix player was undoubtedly the right one. Netflix was already struggling to strike licensing deals with media companies, killing its first production unit, Red Envelope Entertainment, in 2008. It wasn’t until 2012 that Netflix would start producing original content again, and at that point it was clearly the market leader.
Had Netflix decided to take the hardware path, it may never have gotten to that point. Nowadays almost every TV shipped has a big red Netflix button, and the service has more than 180 million subscribers worldwide.
For his part, Roku was a complete success, at least in the USA. The company’s ninth generation of devices was launched on October 15, 2020. The premium, 4K-capable Roku Ultra still keeps the price of $ 100 for the first device, but the cheapest device in the Roku lineup is only $ 30. At this price, almost anyone can join the streaming revolution.
This is the eleventh entry in our Did You Know That series, where we dive into the history books of Android and consumer technology to uncover important and interesting facts or events that have been forgotten over time. What would you like to see from us next? Let us know in the comments and check out our previous entries in the series below.