Acquisitions provide an opportunity to stimulate growth, gain a competitive advantage within a specific marketplace or expand a business’ marketplace. Business leaders are wise to consider these deals to help grow their business. But how exactly do these deals work? Roku’s recent acquisition of Quibi provides an example.
Roku, a service that helps consumers stream entertainment on their televisions, recently announced the acquisition of Quibi. The deal may position Roku to expand its reach, offering its customers the ability to peruse Quibi’s vast library of 10-minute video clips.
Why would Roku acquire Quibi? Creators originally released Quibi in January of 2020. The new streaming service seemed poised to have a dominant presence. After all, at that time offering short clips seemed ideal. The marketplace was filled with consumers who were always running from one place to another with short periods of time to watch some entertainment. With well-known talents like Guillermo del Toro, Steven Spielberg and Anna Kendrick, the platform seemed set to draw in customers and make an impressive debut.
Unfortunately for Quibi, the global pandemic led to a marketplace that was no longer what it once was. Instead of rushing around, people were staying home. Consumers now had the time to binge entire seasons. As such, Quibi did not do as well as expected. The $1.75 billion venture ultimately shut down shortly after it launched.
The move may position Roku for future success. A piece in Barron’s provides some insight into the company’s motives. It notes the acquisition will help Roku combine exclusive content with distribution, essentially expanding its market reach.
