Advertising Is Roku’s Biggest Business

Dave Zatz —  May 30, 2016

We generally think of Roku in terms of streaming boxes and sticks. Yet, the company pitches themselves as a software platform and the reason hardware remains so affordable, for both consumers and television licensees, is because the company makes the bulk of its revenue elsewhere.

Roku-2-review-2015-remote

From a Business Insider interview of Roku CEO Anthony Wood:

I don’t think people understand how we make money, that it’s a platform we distribute, we license, and then we monetize our installed base. […] When you sign up for Hulu on Roku, through Roku billing, we get a revenue share for the life of that customer. When you watch an ad-supported channel on Roku, some of that ad inventory is controlled by Roku. […] Advertising is our biggest business.

By comparison, it seems reasonable that Amazon’s intent with the Fire TV is to support their ecosystem of paid services, including Prime and video rentals. However, Roku doesn’t see their one-time suitor as much of a threat when it comes to television-based app delivery.

In the licensing business, we’re by far ahead, and there’s a couple of reasons. One is our neutral positioning. 30% of all TVs sold in the US are sold through Walmart. […] they hate Amazon. Walmart is never going to carry an Amazon TV, ever. […] In licensing, really the only competitor is Google. Apple doesn’t license […] So they’re our biggest competitor for TVs.

(via Cord Cutter News)

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3 responses to Advertising Is Roku’s Biggest Business

  1. Interesting too, in the interview he talks about how Roku users spend way more time viewing than Apple TV users, that it’s for “serious streamers” — he talks about all their niche channels too- church channels,etc.

  2. Thanks for that tidbit, Alan. That is interesting. You prompted me to actually read the damn interview.

  3. Yeah, it was a wide ranging discussion. In fact, I had an exchange with Luke of Cord Cutter News wondering about the purpose of the interview, as it’s more industry-specific than of consumer-interest. Was this scheduled to help set the stage for an IPO or additional investment?