Commentary

Roku Squares Off Against OTT Rivals

Despite some stock market price dings for Roku -- moves made by bigger, more traditional media companies, as well as analysts' concerns about too-fast growth -- the overall picture of the OTT TV industry continues to evolve.

Roku might have a hand in some nagging traditional pay TV disruptions disappearing -- like those looming nasty TV blackouts.

One media analyst says the average Roku user watches an amazing 3.5 hours of TV through its set-top box or software platform on smart TVs or other devices. By way of comparison, the average Netflix user only watches 71 minutes a day.

For many, this is an oranges-and-apples comparison -- Roku (mostly an ad-revenue generated site) versus Netflix (no advertising).

Still, one key metric is that Roku brings in $4.62 million in revenue from its subscribers, estimated to be 29.1 million. (Netflix has around 60 million.) For 2019, Roku projects annual revenues to hit $1.04 billion -- revenue that continues to rise anywhere from 30% to 40%.

At the same time, analysts worry about the obvious, especially from seemingly big digital players like Amazon, when it comes to its set-top-box subscribers. Amazon was recently revealed to be larger than Roku. (Amazon Fire TV has 34 million active users.)

That’s not the only concern. Walt Disney, NBCUniversal and WarnerMedia are bigger -- especially in terms of original content. And that could be a factor.

One troubling area is that the Roku Channel pulls the majority of its advertising revenue from older movies and library product, stuff from traditional TV-movie companies.

For those who are not familiar with Roku, here’s the big draw: It’s free to Roku users once they are buying set-top-box devices or, for example, an accessing app via a smart TV. Is that enough in a world of oversupplied “premium TV” shows?

No worries, say senior Roku executives. Those bigger companies are Roku’s “partners. We can really help those companies build scale if they want to use some of the marketing techniques we have on our platform,” says Anthony Wood, CEO, Roku, speaking recently on CNBC.

The good news is that the digital/OTT business is still growing. The bad: Traditional media companies are ramping up in a big way to take a bigger share of this business. New direct-to-consumer platforms may not depend -- as much -- on those secondary TV distribution deals for revenue growth, money that might come from content deals with Roku.

With many more options for consumers to get their networks, favorite programs and content, one thing that might fade to black: TV blackouts — or threats of one.

4 comments about "Roku Squares Off Against OTT Rivals".
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  1. Ed Papazian from Media Dynamics Inc, May 29, 2019 at 3:28 p.m.

    3.5 hours per day for Roku users watching Roku content? Seems a tad on the high side---in fact, the very high side---in my opinion. A typical Netflix sub devotes about 50-55 minutes per day--actually most watch for about 100-110 minutes but every other day----- and this is almost twice what a major, fully programmed broadcast TV network gets for its entire total day program menu.

  2. John Grono from GAP Research replied, May 29, 2019 at 5:19 p.m.

    And of course Roku only knows when the box is streaming and not that the content was being viewed.

    Maybe lots of kids, cats and dogs have learnt how to use the remote.

  3. Mark Laurence from Greater Media, May 30, 2019 at 12:15 p.m.

    The claim is “the average Roku user watches an amazing 3.5 hours of TV through its set-top box or software platform on smart TVs or other devices.”

    If you’re a cord-cutter, everything you watch is probably through Roku, including Netflix, Amazon, HBO, YouTubeTV, Sling, etc.

  4. Ed Papazian from Media Dynamics Inc, May 30, 2019 at 12:45 p.m.

    A valid point, Mark. I mistook it for saying that such viewing was to Roku fare. However, even if the stats are correct, it's unfair to compare viewing to all types of content on Roku to viewing allocated to a particular channel like Netflix. Of course, the former is higher.

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