Netflix built a streaming box, almost killed it — the spin-off became the top platform

In 2007, Netflix was still a DVD-by-mail company, but streaming was the future. CEO Reed Hastings decided to build a set-top box called 'Project: Griffin' that would let customers stream Netflix content directly to their televisions. The hardware was developed by Anthony Wood's company, which had previously built the ReplayTV DVR.

Weeks before the project's planned launch, Hastings had a change of heart. He realized that building a proprietary hardware device would hamper Netflix's ability to license its streaming service to other platforms. TV manufacturers, game console makers, and cable companies would be reluctant to partner with a company that was also their competitor in hardware. Hastings killed the project.

Instead of shutting it down entirely, Hastings decided to spin off the hardware team as a separate company. Anthony Wood became CEO of the new company, named Roku — the Japanese word for 'six,' reflecting that it was Wood's sixth startup. The first Roku player launched on May 20, 2008, priced at $99. It was a small black box that streamed Netflix content to any TV.

Roku grew steadily while Netflix focused on its streaming service and licensing deals. By 2024, Roku was the market leader in US streaming distribution, reaching nearly 145 million people. The device that Netflix was afraid to launch had become the dominant streaming platform. Netflix's 'mistake' — building hardware — became Roku's success.