Roku has been the darling of investors for almost two years. Now, however, the set-top box/smart TV platform company -- and its stock -- was sharply hit with direct Comcast business news.
Comcast is offering its Xfinity Flex set-top box product -- something similar to Roku -- at no cost to internet customers. Xfinity Flex is a free streaming media set top box that can access other platforms and entertainment apps not necessarily owned by Comcast, like NBCUniversal.
For its part, Roku has been shifting its business, as well. It started as a company basically selling set-top boxes to consumers that sit alongside other TV devices. But it quickly moved into make deals with TV manufacturers in getting its software platform incorporated onto manufacturers smart TV app interfaces.
Beyond the free Xfinity Flex service, Comcast’s NBCUniversal has its own streaming effort, Peacock. That said, Peacock will be focusing on NBCU content coming from its traditional TV networks: NBC, USA Network, Bravo, Oxygen, Telemundo and others.
The key difference for Peacock versus other streaming TV services -- at least initially according to NBC executives -- comes in focusing on advertising.
In part, Steve Burke, CEO of NBCU, has talked about the company’s streaming platform being akin to what it was like when the broadcasting business started -- free and ad-supported. All you needed was a TV set, an antenna and some electricity.
In a somewhat similar vein, Roku, among many analysts, is touting its own Roku Channel -- and its overall promise of fast, growing ad revenue. Currently, Roku has access to thousands of entertainment video apps/channels, and many are free to users.
Pivotal Research Group media analyst Jeffrey Wlodarczak said Roku is one of the few investment pure-plays, among numerous OTT players globally, to focus on the “movement of advertising dollars [shifting] away from traditional TV to targeted formats.”
All this comes as Comcast commands a strong share of the U.S. broadband market.
Remember when John Malone -- longtime cable system executive legend -- bemoaned that the cable industry missed its chance to create its own Netflix years ago?
Perhaps Comcast realizes -- in looking at another significant and growing part of the premium video digital business -- this can’t happen again.
Wayne, as you note, the "key" difference is the fact that Comcast is going the ad-supported route and this trend will, in my opinion, result in premium content ad dollars moving away from "linear TV", where CPM s are relatively low, to streaming venues owned by the same companies-- - where the sellers will command much higher CPMs on the grounds of superior targeting capabilities. If and when Netflix finally offers an ad-supported option to subscribers this will accelerate the process. Ultiamately, "linear TV", may wind up mainly with low cost, low CPM reality, talking head, 24/7 "news", and rerun fare while the high priced content---pro sports, edgy dramas, etc. is seen primarily via streaming.