Roku: The Trojan Horse of streaming
Stocks

December 9, 2021
Yesterday, Roku β the streaming device provider β reached a deal to keep Youtube on its platform.
What’s the big deal? Roku and Youtube were disputing for months on what terms to include Youtube’s services inside Roku’s devices.
- Roku’s POV: Youtube wanted unfair terms like prioritized search results.
- Youtube’s POV: Roku used its market power to negotiate better terms.
Since its founding in 2002, Roku has grown into a dominant force with 38% of the US smart TV operating system market β surpassing even Apple TV and Amazon’s Fire TV. So how did Roku β once a small competitor β become such a dominant player in streaming?
The trojan horse: While Netflix went the streaming route, Roku led with its Roku devices and TVs β which hosts other streaming services. But that was only the beginning…
- 4 years ago, Roku launched Roku Channel β its own free ad-supported streaming service with content licensed from other networks.
- Last month, Roku announced plans to develop 50 original shows in the next two years.
With 56.4M active accounts β Roku’s reach is still a fraction of Netflix’s 214M subscribers. Roku has also struggled to expand beyond North America β with only 6.4% of the global market share.
Looking back: It’s been a difficult year for Roku’s stock β down 48% from its 2021 highs. Like many stocks benefiting from COVID β Roku’s growth slowed over the past year with supply chain issues impacting device sales.
One stat: This is the third time Roku fell over 50% within 4 months since its IPO in 2017 β but its stock is still up 839% since.