L Clark Tate

With Roku and Netflix as next-door neighbors, Los Gatos becomes a new entertainment capital.

Published by Los Gatos Magazine | January 2016

by L. Clark Tate

Hollywood and Silicon Valley have an ongoing flirtation, as evidenced by The Social Network, two Steve Jobs feature films in as many years, HBO’s Silicon Valley, and Netflix’s newfound Emmy award-winning studio status.

As Netflix’s hometown, Los Gatos has been a nexus where the two cultural powerhouses meet. And we’re getting a little more tinsel tossed our way.

“America’s favorite” video-streaming device is coming to town: Welcome Roku. As streaming becomes the new way to watch television, it looks like Los Gatos is quickly becoming Streamtown USA.

Does this mean we’re Hollywood North? And the even bigger question: Is Brad Pitt, who is partnering with Netflix to finance director Bong Joon-Ho’s next project, coming to town anytime soon?

This Is Roku

As you may know, streaming simply means delivering video content from the internet instead of cable or satellite. YouTube and Facebook videos are streamed. Increasingly, so are films and series, including Netflix’ award-winning shows. Roku takes it to your TV, providing access to different media channels. Content is purchased separately, through something like a Netflix or Hulu membership.

Sure, you could just plug your computer into your TV with a cable—but you wouldn’t have a remote or a slick operating system. Your TV screen would be nothing but a bigger monitor. Roku is a whole new kind of TV.

They were the first to do it, with a set-top box back in May of ’08. Market research company Parks Associates affirms that Roku devices are used more than any other, the basis of Roku’s “America’s favorite streaming players” claim.

Of course, in the technological eon that has passed since 2008, Roku has innovated again, several times. They created the first streaming stick, which plugs into a TV’s HDMI port, and are licensing their operating system to smart TV manufacturers to create co-branded Roku TVs, bypassing the box/stick. They also license their platform to cable and satellite companies.

In short, Roku is everywhere. The company could not set its sights higher: “We aspire to power every TV in the world.”

So far, so good. Roku users streamed 3 billion hours of entertainment in 2014. That’s nearly 342,466 years of showbiz. That record is likely to crack again soon. Roku users logged 2.5 billion hours between January and July alone. Bottom line: it’s boom time in the streaming world, and the biggest chunk of that world will soon be headquartered in Los Gatos.

Why Los Gatos?

According to Tricia Mifsud, Roku’s VP of Communications, Roku’s decision to move to Los Gatos in January of 2016 was a choice of convenience. The company’s Saratoga headquarters currently sprawls among five buildings, one of which is a quarter mile away from the other four.

“We’ve outgrown where we are,” Mifsud says. “We were looking for a place that can accommodate our future growth.”

In what seems like a scene straight out of Hollywood itself, the former Netflix complex in Los Gatos was available. Roku’s 300 headquarter employees will benefit from being housed under only two roofs in close proximity with extra floors to grow into.

Los Gatos itself was appealing as well. “Like Saratoga, it’s a really quaint city,” Mifsud said. “The stars aligned.”

And then there’s Netflix. “We are a partner of Netflix, so obviously it will be convenient to be close to them,” says Mifsud.

Just how powerful the partnership between Roku and Netflix is draws quick conjecture. Roku delivers Netflix content, produces the “Netflix Recommended” Roku TV and is now leasing a building from the content giant. The many connections make it easy to conflate the two companies.

To put it in perspective Roku has 3,000 content partners, of which Netflix is one. Netflix and Roku both maintain that the bulk of their collaboration lies in the past.

“We certainly have a history together,” Mifsud says. “We have a very long relationship, but I wouldn’t put emphasis on it beyond that.” Netflix’s Anne Marie Squeo put it a little more bluntly: “There is no relationship now, other than we are subletting space to them as we move our offices over to the new buildings.”

That history, though—it’s significant. In the early days of Roku, founder and CEO Anthony Wood also served as Netflix’s VP of Internet TV.

During his tenure, Wood helped Netflix transition from distributing entertainment via snail mail to online streaming. Significant. And certainly historical. That move positioned Netflix to lead the streaming revolution and become the entertainment giant that it suddenly has become. CNN Money coined “the Netflix effect” to explain how the fastest-growing company in the S&P 500 fueled a stock market surge that made 70 percent of investors money in November. Giant.
Roku was born at the same capital-M Moment. While helping to put the ’net in Netflix, master innovator Wood (inventor of the digital video recorder) developed the first iteration of Roku’s streaming player. The set-top box that first dropped in May of 2008 offered one media streaming channel: Netflix.

Unique Advantage

Since gaining the other 2,999-odd channels, Roku’s independence from a content store like Netflix is one of its major selling points. TV-streaming competitors—Apple, Google, Amazon—are all content stores themselves.

According to Roku, the biggest benefit of their lack of channel loyalty is an “unbiased and comprehensive search.” Searching Roku for an actor, director or title results in a list of channels providing related content. Roku’s lists are longer than its competitors’, leaving the viewer free to buy content from any source.

A newer feature called Roku Feed or My Feed allows users to track their favorite artists over time. Type in an actor or director and you’ll be updated whenever something new from them appears.
So while it may be nice that Roku and Netflix are neighbors, no one at Roku is saying it’s a big deal. But Los Gatos they love, obviously. “We’re very excited about the move to Los Gatos, as are our employees,” Mifsud says.

Monica Renn, the Town of Los Gatos’ economic vitality manager, echoes the sentiment.

“Roku provides a quality product that enhances the lives of many people around the world, and we are proud that they have chosen to make Los Gatos their home,” Renn typed in an email. “We look forward to watching them grow and prosper here.“

In any case, May 20, 2016, Roku’s self-declared #NationalStreamingDay, is likely to be big in Los Gatos this year. Somebody invite Brad.