Market speculation about a possible corporate merger involving erstwhile streaming video partners Roku and Netflix may continue to generate media buzz, but Roku CEO Anthony Wood is mum about the topic.
“In terms of Netflix, obviously I can’t comment on rumors,” Wood told CNBC’s Julia Boorstin June 22 from the Cannes Lions film festival in France.
It’s an interesting choice of words considering Wood wouldn’t dispell the scuttlebutt either. The executive was Netflix’s short-lived head of internet TV in the early 2000s as the by-mail DVD movie rental service was readying to launch the subscription streaming video (SVOD) industry.
Instead, Wood launched Roku with seed money from Netflix to manufacture streaming devices — including the “Netflix Player” in 2008 — that enable consumers to connect the television to the internet. Fast-forward to the present and the SVOD market — led by Netflix — is embracing advertising as the standalone subscription video business plateaus.
Roku, through its pioneering ad-supported The Roku Channel is now a major player in the AVOD and free ad-supported streaming TV market with more than 60 million active accounts. The Roku Channel was a top five channel on the Roku platform in the U.S. by reach and engagement through the most-recent fiscal quarter.
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For the first time, TV streaming devices surpassed legacy pay-TV devices (set-top devices and DVR) in weekly reach in the United States, with 65% of adults aged 18-49 streaming TV compared with 63% watching legacy pay-TV, according to Nielsen.
“Our ad business has been growing like gangbusters,” Wood told Boorstin.
Indeed, in Q1 the top 10 broadcast TV advertisers increased spend on Roku nearly 80% year-over-year, while spending 7% less on legacy pay-TV, according to Roku.
“All television is going to be streamed. That means all TV advertising is going to be streamed,” Wood said.
The executive contends the biggest impediment to growth for Roku — and all streamers — is that marketers’ mindsets are still used to spending dollars through legacy pay-TV.
“The economy is causing to marketers to think harder about how they spend their money, how they can be more efficient,” he said.
When asked how Netflix’s pending foray into ad-supported VOD could impact Roku, Wood deflected, saying that the evolution of TV has been driven by advertising.
“Ads are great because they bring down the cost for consumers,” he said. “We’ve been a big partner, we have a great relationship with Netflix for a long time. But we have great relationships with a lot of streaming content companies whether its Disney, YouTube or Hulu.”