Overbought Roku May Become Next Broken Tech IPO
Best known for its Roku streaming player for TV, the company also has a platform business that provides access to streaming content and is generating more revenue with better margins.
The company's business model will shift from selling TV streaming players to licensing its streaming platform uses in smart TVs as they ultimately become the main devices for TV streaming.
Roku may choose to leverage the wide use of its streaming platform to create a new type of streaming-only device, like a connected TV monitor with its built-in streaming platform.
What happens to Roku Inc. (NASDAQ:ROKU) when every home has a smart TV and no one needs a Roku player for TV streaming anymore? No, the company would not be out of business simply because the market for Roku's streaming device would cease to exist. Instead, it would have transformed itself into a TV streaming platform provider by licensing its most widely used Roku streaming platform to smart TV makers as part of the their user interface that can conveniently host different streaming channels from increasingly more content providers. The company could also develop its own smart TV, something differentiated from a typical smart TV and focusing on the specific use for TV-like streaming only.
It has already been generating revenue beyond device sales, earning subscription and advertising fees as shared with streaming content providers when users use the Roku platform to access a streaming service. In 2016, the company’s net revenue grew 25%, while platform-specific revenue increased over 100%. In the first six months of 2017, net revenue rose 23%, with platform revenue up 90%.
The shift from selling the Roku player to relying on a wider use of its streaming platform is already happening and helps the company secure future sales when the market for its player eventually disappears. Furthermore, margins for the platform segment are more favorable than those from making and selling devices, making the platform business a worthy pursuit, especially given that the company has been losing money all these years.
source: https://seekingalpha.com/article/4111015-happens-rokus-platform-smart-tvs-everywhere
The company's business model will shift from selling TV streaming players to licensing its streaming platform uses in smart TVs as they ultimately become the main devices for TV streaming.
Roku may choose to leverage the wide use of its streaming platform to create a new type of streaming-only device, like a connected TV monitor with its built-in streaming platform.
What happens to Roku Inc. (NASDAQ:ROKU) when every home has a smart TV and no one needs a Roku player for TV streaming anymore? No, the company would not be out of business simply because the market for Roku's streaming device would cease to exist. Instead, it would have transformed itself into a TV streaming platform provider by licensing its most widely used Roku streaming platform to smart TV makers as part of the their user interface that can conveniently host different streaming channels from increasingly more content providers. The company could also develop its own smart TV, something differentiated from a typical smart TV and focusing on the specific use for TV-like streaming only.
It has already been generating revenue beyond device sales, earning subscription and advertising fees as shared with streaming content providers when users use the Roku platform to access a streaming service. In 2016, the company’s net revenue grew 25%, while platform-specific revenue increased over 100%. In the first six months of 2017, net revenue rose 23%, with platform revenue up 90%.
The shift from selling the Roku player to relying on a wider use of its streaming platform is already happening and helps the company secure future sales when the market for its player eventually disappears. Furthermore, margins for the platform segment are more favorable than those from making and selling devices, making the platform business a worthy pursuit, especially given that the company has been losing money all these years.
source: https://seekingalpha.com/article/4111015-happens-rokus-platform-smart-tvs-everywhere
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