• Brett Schafer

All In On Roku

Roku is up 84% this year and deservedly so. Roku burst onto the scene, in the digital streaming and smart TV’s space after its 2017 IPO. Since that point, Roku has appeared to do everything right.

Roku has created a streaming ecosystem at one of the lowest price points in the entire smart TV industry. They offer quality TV’s for a low price, and have an easy to use platform. The platform allows users to access all of their favorite apps or streaming services in the click of a button. From Netflix, to YouTube, to ESPN, they have all you need in one spot. Roku has estimated that 1 in every 4 smart TV’s bought in the US today, are Roku TV’s.

The overarching goal for Roku is to create the best possible ecosystem to attract users, then to monetize their platform in the best way possible. So far they seem to be doing pretty well.

The ecosystem:

  1. Almost any service, easy to use, all on one page

  2. Seamless connection through a mobile device (Ex: Watching a video on your phone, and switching it directly to your Roku TV)

  3. Using your mobile device as a remote

  4. Voice recognition devices

  5. The Roku Channel

Growth of the Platform:

  1. In 2018, Roku added 7.8 million active accounts. Their total count is 27.1 million

  2. Streaming hours increased from 9.2 billion hours to 24 billion hours

  3. 20% of all US TV households now use the Roku platform

Monetization:

  1. While overall revenues grew 45% year over year, platform revenue grew by 85%

  2. Average Revenue per User increased by more than 330%

  3. Monetized video ad impressions more than doubled

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The platform is the highest margin business that they currently run, and they are projecting that more and more advertisers will begin to switch over to the streaming space, instead of traditional TV. Roku made it abundantly clear that they will continue to spend money and reinvest into the business, to give users the best possible experience. The investments they are making today may hamper their ability to be profitable in the short run, but will benefit investors dramatically in the long run.

What are we missing? Everything has looked positive out of Roku thus far, but what’s the catch? Many people have claimed that gaining traction while competing in the same space as Apple and Amazon will be a difficult task. Yet, Amazon just made it clear that this is not a winner take all scenario. Roku recently announced that you can now control your Roku TV through the Amazon Alexa device. Although Roku already has their own voice recognition software that allows users to operate their smart TV, this partnership only adds to the brilliant ecosystem Roku has already built.

alexa on roku

Disclosure: The author is not a financial adviser, and may have an interest in the companies discussed.

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