Roku Says Pandemic ‘May Accelerate’ Platform Growth

Nothing like a global pandemic to invigorate business — and costs.

Streaming media device pioneer Roku May 7 said most business-wide metrics surged during-and-after the first quarter, ended March 31. Active accounts grew about 38% to 39.8 million compared to the previous-year period at 29.8 million accounts — driven by 70% year-over-year increase in new accounts.

Streaming hours rose by about 80% year-over-year, driven by an increase in streaming hours per account of approximately 30%. The company said pandemic-associated stay-at-home orders and increased unemployment appear to have accelerated the shift from linear TV viewing to streaming during the past few weeks.

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Roku cited Nielsen data indicating primetime linear viewing among adults 18-34 from March 16 to April 19 decreased 18% year-over-year, with about 50% of TV content consumption streamed.

In a shareholder letter, founder/CEO Anthony Wood and CFO Steve Louden said player sales increased 25% year-over-year. Roku TV models now account for more than one in three smart TVs sold in the U.S. and more 25% of smart TVs sold in Canada. Streaming hours increased by 1.6 billion hours to a record 13.2 billion.

“[We] have benefited from a surge in OTT usage,” Wood and Louden wrote. “Current events have increased overall demand for both players and Roku TV models around the world.”

Yet while net revenue grew 55% to $321 million, and platform revenue increased 73% to $233 million, costs ballooned 76% to $196 million, driven in parts by sales and marketing. Net loss skyrocketed more than 500% to $55 million from $10 million.

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Wood and Louden said Roku is working with retail partners and TV brands to plan for the rest of the year — given the possibility of restrictions or changes in consumer shopping patterns during traditionally strong sales periods such as Back-to-School, Black Friday and Christmas.

“Over the longer term, not only do we believe that the trends that we expect to define the streaming decade will remain intact, but changes brought on by the COVID-19 pandemic may even accelerate Roku’s path to greater platform scale,” they wrote.

Roku CEO Takes Credit for Disney Reaching 26.5 Million Streaming Subs

Disney said it generated 10 million Disney+ subscribers in the first 24 hours of launching — largely through its app. How it reached 26.5 million subs just six weeks later, well, Roku would like to take some credit for that milestone.

Speaking on a Feb. 13 earnings call, Roku founder/CEO Anthony Wood told analysts that with the company’s signature streaming media device ranked No. 1 (by Parks Associates) in the domestic market, having access to the Disney+ app on its platform help jump start subscriptions.

“One of the things Disney did, is they really lean into the tools that we have available on our platform,” Wood said. “And when companies do that, I mean, we’ve built a lot of great ways to sign up subscribers. So, I think we were an important part of them reaching that milestone.”

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Wood, who contends half of all domestic pay-TV subs will cut the cord by 2024, doesn’t see linear TV distributors such as Comcast entering the over-the-top video market as a threat.

“We have the Xfinity app on Roku,” he said. “And I have it on my Roku, and that’s what I use to watch TV sometimes. [But] we just don’t see competing with traditional cable distributors, it’s a big part of our [OTT] competitive dynamic.”

Wood said the pending rollout of the Peacock streaming service by NBC Universal would likely give Roku an additional third-party app to market — although no official agreement has been reached.

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Roku monetizes its platform on a revenue-sharing basis for third-party SVOD services and splits ad-revenue for AVOD platforms. The company said it made $23.14 per user in 2019 — up $5.19 per user in 2018.

“We’re an essential partner for any streaming services trying to build a national audience in United States,” he said. “So, I think it would be natural to assume that there will be some sort of [Peacock] deal down the road.”

 

Roku Ups Loss, Stock Tumbles

Roku, which co-created the subscription streaming video market with Netflix, Nov. 6 reported a third-quarter (ended Sept. 30) net loss of $25.1 million, widened 164% from a net loss of $9.5 million during the previous-year period.

The company attributed the red ink to increased spending on marketing aimed at attracting user/subscribers.

Revenue increased more than 50% to $261 million from $173.4 million last year. Notable drivers included platform revenue, which increased 79% to $179.3 million compared to $100.1 million last year.

Platform revenue includes The Roku Channel featuring ad-supported programming.

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Roku said active accounts increased by more than 1.7 million to 32.3 million, while streaming hours increased 0.9 billion hours to 10.3 billion. Average revenue per user (ARPU) reached $22.58, up 30% year-over-year. Roku’s monetized video ad impressions more than doubled from the previous-year period. Player revenue increased 11% to $81.6 million from $73.3 million last year.

“We continue to execute well against our long-term strategic plan as the TV market shifts to streaming,” founder/CEO Anthony Wood and CFO Steve Louden wrote in the shareholder letter.

The executives said Roku’s “business momentum” makes the platform an essential partner for content publishers and advertisers.

“This is evident in the launch of major new streaming services on our platform and by the growth in the number of advertisers who work with Roku,” they wrote.

“We expect platform revenue to represent roughly two-thirds of total revenue including approximately $13 million in revenue from Dataxu,” Wood and Louden wrote.

The company also revised its fiscal 2019 outlook downward, reflecting continued investment in the business as well as an approximate $5 million hit to Q4 pre-tax earnings related to Dataxu-acquisition-related expenses.

Last month,Roku acquired Boston-based Dataxu, an online video ad platform for $150 million in cash and stock.

Wall Street wasn’t impressed, sending Roku shares down more than 14% in after-market trading.

Roku Selling 1 Million Shares for $80+ Million

Streaming media pioneer Roku May 16 announced it is offering 1 million shares of common stock through Morgan Stanley.

The offering is expected to generate more than $80 million in funds the Los Gatos, Calif.-based company said it would use for working capital and general corporate purposes.

Founder/CEO Anthony Wood May 15 appeared on CNBC’s “Mad Money” with Jim Cramer to explaining how Roku — since launching with Netflix in 2008 — has brought streaming video in the living room through a user-friendly interface and low-cost hardware.

Roku CEO Anthony Wood

“Our goal is to build scale of our active accounts by licensing our technology to third-party TV manufacturers and advertising,” Wood said. “We help a lot of new streaming services build audiences for their platforms.”

Indeed, Roku has almost 30 million registered subscribers accessing proprietary and third-party content, including Netflix, Hulu, Amazon Prime Video and pending Disney+ and Apple TV+ services.

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“Streaming video is very popular right now,” Wood said. “We had almost 3 million people cut the [pay-TV ] cord last year, more than 1 million in the quarter alone. So there’s a lot of momentum right now.”

Wood was asked if big media companies such as Comcast (parent of “Mad Money” creator NBC Universal), which are launching their own over-the-top video platforms, have become “frenemies” with Roku.

“Media companies are partnering with us, not destroying us,” Wood said. “Back when we launched Roku, it was just Netflix and most media companies were trying to avoid streaming. Now they realize it’s the future and they’re heavily invested.”

He said Comcast advertises on the platform and the Xfinity TV app is on the platform, in addition to NBC content.

“Content is what drives streaming,” Wood said. “We have built a purposeful operating system for the TV. It’s designed for the business model TV.”

Roku CEO: We Are the No. 1 Smart TV Operating System in the U.S.

Roku said 33% of all Internet-connected “smart” televisions sold domestically in the first quarter (ended March 31) featured its branded operating system. That’s up from 25% of all TVs sold in 2018.

“In less than five years, the Roku TV has gone from a disruptive idea to the market leader,” founder/CEO Anthony Wood said on the fiscal call. “We have taken the leads from Samsung and are now the number one smart TV OS in the country.”

Anthony Wood

Wood attributed Roku’s transition from streaming media device manufacturer to ad-supported VOD distributor to ongoing consumer moves away from linear TV toward over-the-top video — and the CE industry’s sluggish efforts to develop “homegrown” software OS platforms in televisions.

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“We really think in almost all cases those [OS] solutions are probably uncompetitive and that we will just continue to see gains and share of licensed OS [platforms],” Wood said. “So there is a lot of room to grow. It’s a big opportunity.”

Meanwhile, Roku continues to drive an expanding AVOD market through its branded Roku channel. The AVOD market gained momentum following Viacom’s acquisition of Pluto TV, Comcast’s planned launch of AVOD distribution, Shout! Factory’s Shout TV, Sony Crackle and San Francisco-based Tubi, among others.

“We are excited about the increased investment and focus by major media companies on bringing free content over-the-top,” said Scott Rosenberg, GM, platform business. “When they do this, they ultimately accelerate the consumer move into OTT and expand the economic pie for all of us. We share in their success.”

Indeed, Roku said user accounts increased 40% to 29.1 million from 20.8 million last year. Consumer streaming hours increased 74% to 8.9 billion hours compared to 5.1 billion hours in the previous-year period.

“The most exciting thing about the Viacom/Pluto tie-up is the fact that Viacom is taking content that was previously only available through pay-TV subscriptions and making it available free through AVOD services,” he said. “That not only will that drive viewing on the platform, I think it will also help accelerate the shift of ad dollars over to streaming.”

Roku Widens Quarterly Revenue, Loss — Despite Strong User Adoption

Streaming media device pioneer Roku May 8 reported consumer streaming hours increased 74% in the first quarter (ended March 31) to 8.9 billion hours, compared with 5.1 billion hours in the previous-year period.

The Los Gatos, Calif.-based company said user accounts increased 40% to 29.1 million, from 20.8 million a year ago.

“The shift to streaming and away from linear TV and legacy distribution platforms has enormous momentum,” founder and CEO Anthony Wood said in a statement. “We estimate that in Q1 2019 more than one-in-three smart TVs sold in the U.S. were Roku TVs, making the Roku OS the #1 selling smart TV OS in the U.S.”

Despite the strong user metrics, Roku said its quarterly net loss increased 56% to $10.7 million from a net loss of $6.9 million in the previous-year period. Revenue increased 51% to $206.7 million from $136.6 million in 2018.

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Wall Street shrugged off the loss as it had expected a significantly higher decline as Roku ups content and operating expenses. Analysts also projected revenue of $190 million, which Roku topped by nearly 9%.

Indeed, ad revenue ballooned nearly 80% to $134 million from $74.8 million last year. Roku device sales increased about 18% to $65.4 million from $51.7 million last year.

Roku Names Mustafa Ozgen to Head Players, TV Biz, Replacing Retiring Chas Smith

Roku Feb. 4 announced the hiring of Mustafa Ozgen as SVP and GM of account acquisition. Mustafa joins Roku from SmartKem Limited, where he served as CEO since last September.

Ozgen replaces Chas Smith, who serves as GM and SVP of Roku TVs and player. After a transition period, Smith, a “Digital Driver” in Media Play News‘ 2018 feature, is expected to retire and leave the company at the end of the first quarter (ended March 31).

Founder/CEO Anthony Wood said account growth at the consumer and Roku TV licensing business remains a top priority.

“Mustafa brings a wealth of leadership experience and global TV industry knowledge which makes him well suited to spearhead our mission to make the Roku platform widely used around the world,” Wood said in a statement.

Ozgen joins Roku after having served as CEO of both SmartKem Limited and QD Vision, which was acquired by Samsung to enable its QLED branded next-generation television displays.

Before QD Vision, Ozgen ran TV and media business units as SVP and GM of the home multimedia business unit at Sigma Designs, VP of home entertainment products at CSR and as VP and GM of TV business unit at Zoran Corp. He started his career as a commissioned naval officer in the Turkish Navy.

 

Roku Inks Westinghouse Deal

Roku Jan. 7 announced that Westinghouse Electronics has joined its Roku TV licensing program. Westinghouse Electronics will use the streaming media pioneer’s hardware reference design and operating system in HD Westinghouse Roku TV models, expected in the first half of 2019, and 4K Westinghouse Roku TV models hitting shelves later in the year.

The program offers TV OEM partners a reliable solution for building Internet-connected HD or 4K and HDR smart TVs. Roku provides the hardware reference design, automatic software updates and library of content, enabling OEMs to offer smart TVs at competitive price points.

“The Roku brand is synonymous with streaming and its popular smart TV platform helps us offer a content-rich experience for our customers that is very easy to use,” Brett Hunt, VP of sales and marketing at Westinghouse Electronics, said in a statement. “We can focus on building eco-friendly, energy-saving displays, while Roku manages the smart TV platform offering an overall incredible value.”

The Roku OS offers access to 500,000+ movies and TV episodes via thousands of third-party free or paid channels. Users can search across hundreds of channels returns results in order by price, plus what’s playing live when an HDTV antenna is attached.

The Roku Channel offers 10,000+ free ad-supported movies and TV episodes, and later this month customers will also be able to browse, trial and subscribe to premium subscriptions from popular services.

The Roku Channel provides account management and a single bill for services subscribed to within the channel. Free content is also available with “featured free” as it provides users with direct links to free in-season episodes from top network shows and full past-season catch-ups.

“The licensing program has seen a lot of momentum,” said Chas Smith, GM, Roku TV and players. During the first nine months of 2018 more than one in four smart TVs sold in the U.S. were Roku TVs.”

Roku’s Smart TV Guru Chas Smith Retiring

Roku Dec. 4 announced that Chas Smith, SVP and GM of Roku TVs and players, is expected to retire and leave the company at the end of the first quarter next year. The company has a search underway with a leading executive placement firm to place his successor.

“Over the last several years, Chas has been instrumental in transforming our business,” founder/CEO Anthony Wood said in a statement. “He took the idea of giving consumers and TV makers a simple smart TV and made Roku TV the No. 1 licensed smart TV platform in the U.S.”

Smith joined Roku in March 2010 as VP of sales and led online Roku player sales. In 2012, he assumed the role of GM of OEM to lead the Roku TV business. Three years later was promoted to SVP/GM of Roku TV and Roku players and also oversees the whole home division.

Roku Ups Q3 Loss Nearly 50%

Streaming media device pioneer Roku Nov. 7 reported third-quarter (ended Sept. 30) net loss of $11.7 million, up 49% from a loss of $7.9 million during the previous-year period. Revenue increased 39% to $173.4 million from $124.8 million.

Roku, which created the SVOD market with Netflix in 2008, generated $73.3 million in device revenue, up 9% from $67.2 million last year. Platform revenue, which includes The Roku Channel and third-party advertising, ballooned nearly 74% to $100 million from $57.5 million.

The company ended the quarter with 23.8 million active user accounts, up 43% year-over-year, with more than half of new accounts coming from licensed sources, primarily Roku TVs. Engagement increased with users streaming 6.2 billion hours, up 63% year-over-year.

“We are just starting to witness the massive transition of TV viewing and TV advertising to streaming,” founder/CEO Anthony Wood and CFO Steve Louden wrote in the shareholder letter.

The executives contend the third quarter could be the highest fiscal period yet for pay-TV subscriber losses. A boon for OTT video and platforms such as Roku, according to Wood and Louden.

“The way TV content and advertising are delivered is evolving rapidly and we believe our purpose-built scalable solution is well positioned to be a catalyst for the transition that is underway,” they wrote.