Roku Defends Its Decision To Make Smart TVs – AdExchanger

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Alyssa Boyle

By Alyssa Boyle
The streaming wars aren’t limited to streaming services. TV manufacturers are going toe-to-toe for market share – and the competition is only getting hotter.
Roku’s recent decision to start making its own smart TVs is a natural next step toward its goal of growing its base of active accounts with an engaging operating system (OS), said CEO Anthony Wood during a fireside chat with a Morgan Stanley investor on Monday. And the more engagement an OS builds, the more TVs with that OS will be sold, Wood said, whether that’s a Roku TV or a now-rival TV manufacturer that licenses Roku’s OS.
Roku closed out 2022 with flat revenue growth, which it blames on slowing ad spend. But despite a revenue plateau, Roku added 10 million net new active accounts, which is a record for the company (outside of 2020, when it added 14.3 million new accounts).


Still, starting up a business in TV manufacturing isn’t without risk. Roku now has a new list of competitors, including partner OEMs that manufacture Roku-branded TVs and may not want to do so anymore considering Roku is now a rival.
It’s not uncommon for businesses to start doing both hardware and software, though, Wood pointed out, noting that most of the major TV manufacturers have an ad sales biz. “The reason why companies do this [buildout] is because it allows for more direct contact with consumers,” he said.
And Roku is confident about its prospects for profitability, despite the fresh competition.
Tough competition
Now that Roku has hit 70 million active accounts globally, it can start to transition into prioritizing profitability, not just market growth, Wood said.HI.RES .roku .remote e1643764696486
But part of that profitability requires siphoning market share from the competition. And Roku doesn’t seem intimidated by competitors that have been juggling software and hardware businesses for much longer.
Google, for example, started licensing its OS for TVs before Roku made its OS available to third-party OEM partner brands like TCL. Amazon has an OS and a brand-new TV hardware biz, too. But Wood alleges that Roku’s TV OS is a “better product” than that of Google or Amazon because Roku’s OS was built exclusively for television and not other devices.
Roku’s biggest opportunity lies in taking more market share from other manufacturers with scaled operating systems also built for television – namely, LG, Samsung and Vizio, Wood said.
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Roku claims that one in every three smart TVs sold in the US is a Roku-branded TV, and Wood said Roku’s market share in the TV space should keep growing now that it has its own TVs.
But most of these claims are still just talk. Only time will tell how well Roku’s smart TVs actually compete for market share once they hit the shelves in the spring. And investors seem a bit wary; shares dipped 3% after Monday’s event.
Engaged in engagement
Until then, Roku is focused on building up user engagement, prioritizing discoverability.
“Viewers are spending more and more time just looking for content,” Wood said, and the volume of options is only increasing.
Last year, Roku upgraded its voice-based search and started using its home screen for more sponsorship deals with streaming services, including paid promotions for Disney’s “The Mandalorian” and HBO’s “House of the Dragon.”
Roku also launched a sports hub on its home screen in November, which viewers can use to quickly find out which network or app is airing a particular game.
Roku considers its Roku City screensaver an important competitive advantage because it has new content recommendation tiles Roku uses to promote titles in its library. So, the company is investing more time and resources into that user interface to increase engagement by helping users find content.
And, when paired with Roku TV unit sales, better engagement should help bump up Roku’s average revenue per customer.
“There’s a lot of growth ahead” for Roku’s scale in terms of the new active accounts it’s expecting this year, Wood said.
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About the author

Julia Martin

Julia Martin

Julia is a mechanical engineer with a passion for cars. She covers everything related to automotive technology, from electric vehicles to autonomous driving. Julia loves to get under the hood of cars to understand how they work and is always excited about the future of automotive tech.