February 22, 2018
Roku wants people to watch content on the Roku Channel. And consumers are responding.
Roku, together with Netflix, helped launch the subscription streaming video market more than 10 years ago with a branded “Netflix” media device – after Netflix co-founder Reed Hastings killed a planned proprietary Netflix player.
It was a shrewd move by Hastings focusing on nascent app technology and content distribution (and content creation) rather than antagonizing established CE manufacturers.
Roku, which comes from the Japanese word meaning “six,” symbolizing founder/CEO Anthony Wood’s sixth venture startup, continued down the hardware path bowing a series of set-top devices (including HDMI dongle sticks) and branded Roku TVs, enabling users to stream video from the Internet through a Wi-Fi connection.
Now Roku seeks to distribute third-party content directly through the Roku Channel. And content creators are responding, say company executives.
“It’s exceeded our expectations and is already material contributor to the video inventory that we sell through our advertisers,” Scott Rosenberg, GM and SVP of advertising, said on the fiscal call.
In addition to distributing content via the ad-supported Roku Channel, content holders can use a program called “Roku Direct Publisher,” which enables them to produce a dedicated app in the Roku Channel store.
“That content can also be syndicated and shown inside of the Roku Channel,” said Rosenberg. “So, it acts as a way to drive additional traffic, additional audience past content partners content.”
Roku says half of the AdAge Top 200 advertisers were clients on the Roku platform last year.
Roku platform revenue grew 129% to $85.4 million in Q4, with the largest contributor coming from advertising. Indeed, advertising made up about 75% of platform revenue and accounted for more than two-thirds of the $225 million in platform revenue for the fiscal year.
“Our entertainment networks are a great way to make our TVs better. There’s just a lot of areas that are driving our growth and that will ultimately contribute to continue to [average-revenue-per-user] growth,” said Wood.