Roku: The Trojan Horse of streaming – The Average Joe

    Roku: The Trojan Horse of streaming

    Victor Lei β€” Head of Research

    December 9, 2021

    roku

    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.

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