Roku is a startup from Netflix, which for ten years has become the market leader in streaming television in the United States

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Today the company is ahead of Apple, Google and Amazon in sales of set-top boxes.

Roku is an American company that produces set-top boxes that turn an ordinary TV into a "smart". Devices connect to the Internet and allow you to watch programs, movies and TV shows in applications or on the websites of online cinemas.

Today, half a million movies and shows are available on Roku, and even users can create their own channels. Sales of advertising and subscriptions on the platform are increasing — in 2017 Roku earned $ 225 million on them, in 2018 - $ 416 million, and this year again intends to double the amount.

Why Netflix needed a TV box
Until the middle of 2000-x years, Netflix has worked with online DVD rental. But the discs were delivered by mail, which Netflix lost to its main competitor — a network of rental stores Blockbuster.

You could also connect to Netflix using the PlayStation 3 drive

At the same time, I revised the plans for the hardware project — now the device was positioned as an auxiliary tool for access to the service. The set-top box was supposed to contribute to the growth of Netflix popularity against the background of traditional television and DVD rentals.

At the end of 2007 production of the first batch of Netflix players began, the company was preparing to launch sales. But two weeks before the start of the project, the General Director of the service reed Hastings doubted: he suggested that the appearance of his own device would prevent the development of Netflix on the consoles of competitors.

Netflix decided not to risk releasing the device on behalf of another company — Roku. It was founded in 2002 by Anthony wood, Vice President of Internet television Netflix in 2007-2008. He participated in the design of consoles. Netflix invested $5.7 million in wood's startup, and he resigned as Vice President to launch a new product.

In 2008, the device was launched for sale as Netflix Player by Roku, but the following parties have already come out under the brand of the startup. The models differed only in logos: Netflix was replaced by Roku. Then the functions of the console were limited to streaming video in average quality.

"At first, the device worked only with Netflix, but soon the platform was made open for applications and services of other companies. This decision determined the development of the company."

Despite good sales, Netflix sold its stake in Roku in 2009, fearing competition from the increasingly popular Apple TV.

Roku has become an independent company, but has maintained a friendship with Netflix: they remain important strategic partners, and their offices are even in the same building. Netflix is still the most popular application among Roku users since the release of the first console.

Roku Player
In 2010, Roku began to produce products aimed at customers with different income levels. Three new models entered the market: Roku SD, Roku HD and Roku HD-XR, the last two supported HD quality.

In 2011, to increase sales, the company produces the most affordable at the time console in its line — Roku LT for $49.99 (today the most inexpensive device of the company costs $29.99). In the same year, the developers have come up with a universal search function for all available applications, allowing you to quickly find the right content and great deals.

In October 2014 came Roku 4 — the first console that supported 4K. Back then, the Roku 4 had the fastest processor among its competitors. By the end of 2015, the new product became the best-selling streaming player in the United States. At the same time, the company stopped producing cheap Roku LT, offering users to switch to updated models.

Roku model range is constantly updated, and in September 2018 presented the seventh generation of consoles. Now even the most budget model supports 4K resolution.

Roku TV
On January 5, 2014 Roku together with Chinese TV manufacturers TLC and Hisense presented Roku TV, connecting the set-top box and TV in one case.

Integration with Roku has become an important advantage for Chinese manufacturers. And it was not so much the good reputation of the company: TLC and Hisense could compete in the market of "smart" TVs without developing their own SOFTWARE.

Roku gradually expanded its range of partners and by the end of 2018 was already cooperating with ten manufacturers, including Philips and Hitachi. Every fourth TV set sold in the United States — Roku TV.

Roku Channel
In September 2017, the company launched its own roku Channel channel with free access to more than 10 thousand films and TV shows for viewing advertising. It was a strategic decision: the company took a large share of promotional materials from applications and gained access to the analysis of user preferences, which made it more effective to target and sell advertising.

"According to data for 2018, Roku Channel became the third most profitable source of income for the Corporation."

The only apps that Roku does not control the ads, YouTube and Netflix. But the company earns on them: each user starts a session from the main roku screen, where the content is promoted based on previously viewed videos.

Roku in the US market
Roku is a market leader in TV set-top boxes in the United States, in 2018, the company's share was 37%. Its competitors — Apple TV and Chromecast — lag behind in sales, but Roku is catching up with Fire TV — over the past four years, sales of the device from Amazon have more than doubled. At the beginning of 2018, Amazon's share reached 28%.

Roku also ranks first in the number of daily users and hours of watching videos.

At the beginning of 2017, Roku owned 36.2% of the us TV box advertising market. By the end of the year, the share had almost doubled to 68.8%. In January 2019, Roku announced that the number of active users exceeded 27 million people.

Roku strategy prospects
Conducted in 2018, a study Parks Associates showed that almost 40% of us residents in homes are set-top boxes, 50% — "smart" TVs. At the same time, users of set-top boxes watch TV more: 10.4 hours a week against 9.8 hours from owners of "smart" TVs (half of them also purchased a set-top box).

Roku CEO Anthony wood is confident that TV advertising will form the basis of the Corporation's income in the future. Because, despite the ever-growing role of mobile devices, people prefer to watch long videos on TV.

Smartphones will turn into a control panel, where the user can find interesting content by displaying it on the big screen. The company develops these functions in IOS and Android applications.

Income from consoles gradually reduced. 56% of income ON Roku accounted for two-thirds of this amount brings advertising and the rest of the affiliate content. According to the report, in the third quarter of 2018, advertising revenues increased by 74% compared to 2017, exceeding $100 million At the end of 2018, the company's annual income amounted to $742.5 million.

The company expects that by the end of 2019, total revenue will approach $1 billion in Equipment sales, roku hopes, will be only 30% of the amount, and current sales from advertising will double — as in 2018.

The reasons for the success
Unlike the consoles of competitors, the Roku operating system is completely open, which contributes to the free appearance and development of new applications and channels.

In addition, Roku does not limit the work of services competitors like Netflix, Amazon Prime, YouTube, Google Play and HBO. Therefore, even direct competitors continue to actively develop their applications based on Roku.

At the same time, Roku encourages the launch of new channels, even ordinary users can create them: deep knowledge in programming or other special skills are not required. In total, Roku offers more than 4,000 free and paid channels with 500,000 available movies and shows.

The General Director of Roku is sure that the main advantage of the company is focused work on the development of streaming television, while technological giants do not pay enough attention to this direction.

Apple, Amazon, and Google, according to wood, "get to work with thoughts: how to sell a bunch of shoes, become the best in the search, sell more phones." "Yes, television is on their list, but in last place", — emphasizes the head of Roku.

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