Since the early days of video streaming on digital media players, Roku has been one of the US market’s leaders. On a recent earnings call, the company revealed that it has grown its active accounts to more than 61.3 million, while streaming hours jumped 14% year-over-year to almost 21 billion. Growth has moderated somewhat recently, which Roku attributed in part to the US government ending stimulus payments and the fact that streaming had seen a COVID-related surge that is now dissipating.
For many years, Roku’s bread-and-butter was its device business. More recently, the company has been able to complement that side of its operation with its platform being integrated into numerous smart TVs, enabling more viewers to benefit from its operating system, user experience, and content provided by The Roku Channel. In the first quarter, Roku’s revenue growth was entirely driven by the platform side, as revenue increased 28% year-over-year to $734 million, bolstered by a 39% jump in platform revenue to $646.9 million, while player revenue declined 19%.
At the same time, Roku has engaged in a very deliberate content push, especially around ad-supported programming. The company sees tremendous potential for its business to grow in this space. According to Roku, TV advertising in the US is roughly a $60 billion market but most of the ad spend hasn’t even transitioned to streaming yet (just 18%). CEO Anthony Wood explained, “Almost half of all TV time is streaming. And so, it’s going to be 100% of ad budgets moving to streaming.”
Wood added that The Roku Channel is “doing incredibly well.” Roku recently added 16 new linear live channels in April, which came quickly after the company had just added 25 channels in February. For fans of culinary entertainment, the company also just signed deals with Martha Stewart, Emeril Lagasse, and Christopher Kimball for seven original series. This fall, The Roku Channel will also air Weird: The Al Yankovic Story, starring Daniel Radcliffe, showcasing the life and career of the legendary parody recording artist.
Moreover, Roku is reportedly considering acquiring a 20% minority stake in premium movie service Starz, which could lead to better access to Starz/Lionsgate’s content library, which includes hits like The Hunger Games, John Wick, Knives Out, and more.
As more and more viewers gravitate toward streaming devices and services to get their entertainment fix, Roku is in a great position to benefit as it’s ensured access to its platform across smart TVs and its own streaming devices. Interpret’s VideoWatch shows that 70% of US consumers currently own either a streaming device, smart TV, or both. And among owners of streaming media devices, Roku commands nearly 50% of the market.
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