Device companies are taking the fast lane.
In the streaming space it’s important to differentiate content aggregators from companies producing original content, and distribution platforms. Now, if it only was that easy…
The truth is that content aggregators started producing original content, hardware/software companies started their own streaming service with some of them producing new content too (Apple, Amazon), and distribution platforms are expanding their footprint by extending the range of devices on which their services are offered, by increasing their partnerships and by conquering the smart TV world.
Basically, there’s no escape. We are happy victims of one or more of them, and it’s ok.
In this crazy landscape, there are companies like Roku that might be seen at first glance essentially as hardware companies manufacturing the devices that allow users to access the platforms and content aggregators like Hulu, Netflix, Crackle, etc. However, Roku sees itself as an advertising company – and rightly so – which in fact makes a lot of difference for multiple reasons:
- Shifts the whole mission of the company towards increasing ad sales, instead of relying on the operating system as the only source of revenue;
- Makes the move into smart TVs an additional space to move into;
- Leverages the low price point and the easiness of use of its devices to make the conversion to 4k TVs accessible for everyone. Revenues are coming mostly from ad sales, and for the remaining part from the sales of the Roku sticks.
It’s all about the ad sales, baby.
Roku went IPO last year and got unfairly bashed by analysts. As a matter of fact, the stock performed really well in its first couple of months and started decreasing in November. Analysts rushed to proclaim this was another IPO burst but the truth is that Roku is on a transitional path to become a streaming company overall, with foray into streaming on third party devices. The most relevant move towards that goal has been the release of the Roku Channel, a free (ad supported) app initially conceived as the remote for users of the Roku devices. Starting from the summer of 2018, the Roku Channel will be available also on – surprise, surprise – a direct competitor of Roku, the Samsung smart TVs. Yes, they are competitors but this is clearly a remarkable way to increase exposure for Roku and generate more advertising sales. You don’t need a crystal ball either to anticipate that there will be more partnerships with a similar intent, which is to amplify Roku’s exposure through a multiplication of channels.
The devices are well priced to keep being a success.
At a price point of $49.99 for the Roku stick (with voice remote command), the device is so easily accessible – think that the average price of a smart TV is $250, if you are happy with a smaller one – that it’s extremely unlikely that the smart TV market will ever become mainstream. In the meantime, the company is accelerating the transformation into an ad based, service business. Roku might be aiming at streaming more content: currently the Roku Channel allows to stream hundreds of ad supported movies from both major Hollywood studios but also smaller productions. It’s logical to think that the app will be the new platform to leverage in order to bring more content – especially considering that Roku in 2016 released the Direct Publisher, a new technology to streamline the way content owners publish on Roku devices. This technology might be applied towards a re-launched iOS Roku app experience in 2018.
Featured photo by Viktor Nikolaienko on Unsplash
STREAMINGEEK 
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