Roku TV Set-Top Ad Biz Delivers Impressive Results

Traditional TV media companies need to get into over-the-top TV advertising revenues. The reason is economic. Nontraditional TV companies are making eye-opening advertising TV numbers.

Roku, the biggest OTT set-top-box maker, pulled in $125 million in overall third-quarter revenue, up 40% from the same period a year ago and double the amount since the start of 2017. This was on the day Roku began as publicly traded TV company.

Roku says about two-thirds of its “platform” revenues, which totaled $57.5 million, came from video ads served on ad-supported networks, including The Roku Channel. It did not go into details for all those ad-supported channels.

Platform revenues -- which include ad results -- are growing much faster than set-top-box sales -- up 137% versus the third-quarter 2016. It isn’t the same when it comes to revenue from sales of its set-top players -- a slight 4% hike to $67.3 million from the third quarter in 2016.

No matter. Investors liked this picture a lot -- kicking up Roku’s new stock 26% on Wednesday. On Thursday, Roku rose another 50%, stopping at $29.19.



Roku is the leading TV app set-top-box provider -- with a 37% share, and some 16.7 million accounts. Amazon Fire TV is at 24% share, while Chromecast is at 18% and Apple TV is at 15%.

Roku’s advertising revenue is healthy, and it speaks to what TV advertisers are looking for: TV-like advertising avails. Make that mostly premium TV-video advertising avails.

Now, it isn’t on the same order as Hulu, which does around $940 million annually in advertising revenue, according to estimates. But as a pure independent media company, Roku shows that premium TV digital video advertising has room for innovation.

Much of this may be coming, when this technology might be included in TV sets, with perhaps Roku licensing more to TV set makers and others, all while retaining -- if possible -- some advertising share.

Obstacles will exist everywhere, including from Samsung and Vizio, two big U.S. manufacturers that have been mulling all this advertising activity, especially with their evolving smart TV interfaces.

Until then, we’ll keep our eyes open. On all screens.

1 comment about "Roku TV Set-Top Ad Biz Delivers Impressive Results".
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  1. John Grono from GAP Research, November 10, 2017 at 10:45 p.m.

    Yes this did open my eyes.

    I want to make sure I am reading the reported results correctly.   Total revenue in the quarter of $125 million of which $57.5 million was ad revenue.

    So that is total revenue per day of around $1.4m and average daily ad revenue of around $630k per day.   Given that a Superbowl 30-second spot was reportedly going for $5m the ad revenue is equivalent to 7-8 seconds on the Superbowl.

    I would have thought revenue and in particulat ad revenue would have been higher.   So in that respect, yes my eyes were opened.

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