How Does Netflix's Sub Miss Impact Roku?
Roku's value isn't dependent on Netflix.
Netflix is a big part of the streaming ecosystem, but many other content producers are ramping up their streaming offerings. Netflix does not dictate the industry.
Roku earns almost nothing from Netflix, so there will be no financial impact in the immediate future.
There isn't a strong relationship between Netflix subscriber growth and Roku's active accounts growth.
This idea was discussed in more depth with members of my private investing community, Core Value Portfolio.
No matter how you think Netflix (NFLX) will fare in the future, the fact is that it missed its own subscriber growth estimates by a mile in Q2. U.S. net adds came in almost 50% lower than the 1.2 million forecast, making up a significant portion of the total subscriber shortfall of 1.2 million.
Except for international licensees, most of Roku's (ROKU) active accounts are based in the U.S., so Netflix's slowdown in subscriber growth could be seen as a bad sign for Roku.
I'm not particularly concerned, however. I believe that Netflix's slowdown will not significantly impact Roku's future.
Roku's Value Isn't Driven Solely By Netflix
The value of Roku depends on 1) active accounts growth and 2) monetization of those active accounts. Roku earns virtually nothing from Netflix, so whether Netflix slows down or speeds up isn't going to impact monetization efforts in the immediate future.
Having a robust streaming ecosystem is important to Roku, and Netflix is a big part of that ecosystem. However, everyday Netflix's influence wanes. More and more content is becoming "streamable," not through Netflix, but through Roku and its competitors. Disney (DIS) is the most obvious example as the company plans its big direct-to-consumer launch. Even if Netflix's sluggish subscriber growth is permanent, it wouldn't be a big hit to the streaming ecosystem as many other content producers are just getting started.
The following illustration shows you just a handful of the thousands of content offerings that consumers can find through streaming devices such as Roku
sourece : https://seekingalpha.com/article/4187866-netflixs-sub-miss-impact-roku.
Netflix is a big part of the streaming ecosystem, but many other content producers are ramping up their streaming offerings. Netflix does not dictate the industry.
Roku earns almost nothing from Netflix, so there will be no financial impact in the immediate future.
There isn't a strong relationship between Netflix subscriber growth and Roku's active accounts growth.
This idea was discussed in more depth with members of my private investing community, Core Value Portfolio.
No matter how you think Netflix (NFLX) will fare in the future, the fact is that it missed its own subscriber growth estimates by a mile in Q2. U.S. net adds came in almost 50% lower than the 1.2 million forecast, making up a significant portion of the total subscriber shortfall of 1.2 million.
Except for international licensees, most of Roku's (ROKU) active accounts are based in the U.S., so Netflix's slowdown in subscriber growth could be seen as a bad sign for Roku.
I'm not particularly concerned, however. I believe that Netflix's slowdown will not significantly impact Roku's future.
Roku's Value Isn't Driven Solely By Netflix
The value of Roku depends on 1) active accounts growth and 2) monetization of those active accounts. Roku earns virtually nothing from Netflix, so whether Netflix slows down or speeds up isn't going to impact monetization efforts in the immediate future.
Having a robust streaming ecosystem is important to Roku, and Netflix is a big part of that ecosystem. However, everyday Netflix's influence wanes. More and more content is becoming "streamable," not through Netflix, but through Roku and its competitors. Disney (DIS) is the most obvious example as the company plans its big direct-to-consumer launch. Even if Netflix's sluggish subscriber growth is permanent, it wouldn't be a big hit to the streaming ecosystem as many other content producers are just getting started.
The following illustration shows you just a handful of the thousands of content offerings that consumers can find through streaming devices such as Roku
sourece : https://seekingalpha.com/article/4187866-netflixs-sub-miss-impact-roku.
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