Amazon has made a big deal with Best Buy -- which will now put Amazon Fire TV operating systems into Best Buy in-house, smart TV brand Insignia. Fire TV will also be in Toshiba-branded TV sets.
This has put Roku on the defensive. Roku’s system, which is a major competitor to Amazon Fire TV, saw its stock sink on Wednesday's announcement. Roku’s stock dropped an eye-opening 12% to $31.72 at the close. On Thursday, the stock recovered somewhat, up 3.1% to $32.70.
Roku isn’t just a one-trick pony. It doesn’t just license deals with new smart, connected TV sets; it also sells a lot of OTT set top boxes.
Roku is the current leader when it comes to new OTT set-top box TV platforms. Roku technology may feels transitional -- kind of like what the former TiVo has become, due to the ominpresent presence of time-shifted TV technology/digital recording machines.
The OTT set-top device business includes Apple TV, Sling TV, Google Chromecast, Amazon Fire TV and Roku. Four of those five brands have big TV media and retail ecosystems they can rely on. But not Roku.
Being incorporated in new TV sets is somewhat akin to what Netflix or Hulu or other OTT apps have done when it comes to getting on traditional pay TV boxes -- cable, satellite and telco providers. It make sense to slim down TV consumer living-room devices and remotes. (Then, of course, we’ll get other stuff.)
Roku has a long-term plan -- and it isn’t just about licensing its technology to new pay TV providers. It wants to do content -- which everyone seemingly wants to do -- and other TV-related businesses.
TiVo also had a licensing technology plan to complement selling time-shifting technology units. And then it realized it needed to do more, which included heading into TV research/metrics.
But in the end, it also needed a partner -- maybe an acquirer. That came two years ago in a $1.1 billion deal with acquirer Rovi -- which took TiVo’s name.
This year to date, Roku’s stock has been down 37%. Remember when it went public September 2017 and anticipation was sky-high? The stock is still up 20% from that point. Seems like a best buy.