• by Wayne Friedman , Staff Writer, March 14, 2022

“I think it's inevitable that there's going to be consolidation around a very small number,” Anthony Wood, chief executive officer of Roku, said recently at an industry event. “I predict three licensed TV brands.”

Wood did not provide details as to which brands that might be. But in addition to Roku and Amazon, it would most likely include the largest of the worldwide smart TV manufacturers -- such as Samsung, TCL, LG, Sony and others.

In turn, those companies may counter with: “And where is Roku among this -- in terms of a large install base of Roku-manufactured smart TV sets?” Also, that Roku -- which by many estimates is the leading U.S. provider, with around 60-plus million users -- is way behind in international business.

We get the concern from some analysts. Roku's business is not presently moved by selling “devices” -- what Apple counts on when it comes to iPhone sales, or the smart TV makers. The difference is that Apple also has a strong “service” base of businesses, such as its app store. This is not necessarily the case for other equipment makers.

Wood says many companies will soon figure out that monetization, strength of features and operability are not so easy to achieve.

And when it comes to global TV business, Wood says that in Mexico, for example, Roku has grown to 20% market share in a short period of time. This should signal why Roku could continue to climb globally.

Part of Roku's strong dynamic comes from what it can do with advertising revenue -- which now represents a large part of its platform revenue business. This also includes revenue share from those apps and streaming services (subscription and advertising) that want to be on its platform.

Other companies are making up some ground.

Recent fourth-quarter earnings for Vizio Holdings -- a major U.S. seller of smart TVs -- showed strong results for its smart TV platform advertising revenues -- but not so much from TV set sales, due to supply-chain issues.

Key for these players is whether they have enough total addressable market (TAM) potential to expand beyond their own closed-borders of a TV-set producer.

Wood's other focus is the business needed for “third party” providers to make it all work -- to reach all differentiated smart TV platforms.

What does that mean? Underneath it all, we can guess.  Among TV advertisers, there is still a push for third-party companies in terms of media measurement, to give an accurate portrayal of where their business is going.

Will TV advertisers feel more secure with perhaps one of two “standard” smart TV platforms for their buying needs?