Roku CEO: Our profits come from advertisements, not hardware sales

Polycount

Posts: 2,504   +549
Staff member

If you're a Roku user, you've probably been pretty pleased with the amount of value you've gotten out of your device.

Sure, you have to pay for most of the subscription-based video streaming services Roku connects you with, but the cost of entry is remarkably low - most of the company's streaming sticks hover between a mere $40 and $70.

According to a recent report from The Verge, the reason for these relatively low upfront hardware costs lies in Roku's very business model. The company's CEO, Anthony Wood, says Roku doesn't earn a profit -- at least not a significant one -- through hardware sales.

"We don’t really make money... we certainly don’t make enough money to support our engineering organization and our operations and the cost of money to run the Roku service," Wood said in an interview on the Vergecast. "That’s paid for by our ad and content business."

In other words, similar to platforms like YouTube, Roku uses their value proposition to get people hooked and then aims to monetize them via ads.

It's a clever strategy - unlike a traditional web or desktop-based content platform, users can't block ads on Roku devices. Not easily, anyway. As such, when given no other option, viewers could be more willing to sacrifice a small amount of their time or attention to access their favorite content.

Wood doesn't look at Roku's business model solely as a way to annoy its customers into providing value, though. "It's kind of an exchange," he said. "We help content distributors find customers, sign up customers, and promote their content, and we get paid for that."

Only time will tell how well Roku's business model will work in the long run, but for now, the company seems to be doing better than ever.

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ikesmasher

Posts: 3,062   +1,384
I generally dont understand why rokus are so popular. I have like 4 devices (including a laptop PC which near everyone has) I can connect to a TV that work with streaming services, and almost every TV has their own smart functionality built in now. Additionally there are devices cheaper than roku that do the same thing, and devices the same price as roku that do it better.
 
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SantistaUSA

Posts: 113   +32
I generally dont understand why rokus are so popular. I have like 4 devices (including a laptop PC which near everyone has) I can connect to a TV that work with streaming services, and almost every TV has their own smart functionality built in now. Additionally there are devices cheaper than roku that do the same thing, and devices the same price as roku that do it better.
But most people don't want to keep plugging in or connecting their laptop to their tvs all the time, not everyone has a smart tv etc.

In my man cave I have 2 computers, one is hooked to my TV and the other to my monitor on my desk so I don't need Roku device, but my girlfriend doesn't want to mess with all that so I bought a Roku Ultra ($80 - she paid for half) for the TV in the living room and is a great device, love that I can just plug in a usb drive or connect to my network to share videos and pics.
 

GreenNova343

Posts: 436   +329
I generally dont understand why rokus are so popular. I have like 4 devices (including a laptop PC which near everyone has) I can connect to a TV that work with streaming services, and almost every TV has their own smart functionality built in now. Additionally there are devices cheaper than roku that do the same thing, and devices the same price as roku that do it better.
But most people don't want to keep plugging in or connecting their laptop to their tvs all the time, not everyone has a smart tv etc.

In my man cave I have 2 computers, one is hooked to my TV and the other to my monitor on my desk so I don't need Roku device, but my girlfriend doesn't want to mess with all that so I bought a Roku Ultra ($80 - she paid for half) for the TV in the living room and is a great device, love that I can just plug in a usb drive or connect to my network to share videos and pics.
^^^ This right here.

I'll also add that there are also plenty of specialty streaming channels (not necessarily the big ones) that you can find all sorts of things to watch. And some of the stuff that's available on Roku -- & especially on the specific Roku app -- aren't always available on the big ones. For example, if you're a fan of (semi) cheesy sci-fi TV shows, Roku is the only one that I've seen Andromeda or [/b]Earth: Final Conflict[/b] available on.

And, of course, there's the whole aesthetic. In terms of the amount of space you have to devote to them (from largest to smallest), the progression is Desktop PC ==> Laptop ==> mITX/HTPC ==> Roku box ==> Roku stick. In fact, I much prefer the Roku sticks to the boxes: same capabilities, but aside from the very thin power cord it's not visible because it plugs directly into the HDMI port. Aside from maybe those "PC on a stick" versions, that beats even an HTPC for space saving.
 

OcelotRex

Posts: 558   +302
I generally dont understand why rokus are so popular.
Simply put they work and have the most content available when compared to Apple TV, Fire TV, and Chromecasts:

The interface works with a remote so you don't need a KB/M. Most Roku "channels" allow you to authenticate through a browser/phone/tablet and can "cast" from those devices as well if you're on the same wifi router.All the modern Rokus can be controlled through an app and most allow streaming the audio through that app for private listening as well.

I had a dedicated HTPC/Plex setup for my viewing when it was just me and my wife watching after work, though I controlled it most the time. My 5 year old can work the Roku and watch what she wants; that should show you how simple they are to learn.
 

TheBigT42

Posts: 436   +341
I generally dont understand why rokus are so popular. I have like 4 devices (including a laptop PC which near everyone has) I can connect to a TV that work with streaming services, and almost every TV has their own smart functionality built in now. Additionally there are devices cheaper than roku that do the same thing, and devices the same price as roku that do it better.
Cheap and nice UI...and Plex Client
 
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Uncle Al

Posts: 7,357   +5,766
Probably one of the very few companies today that understand the concept of "consumer friendly" marketplace and their growth proves it!
 
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Dimitrios

Posts: 659   +473
Can you install KODI on ROKU? I love latest Amazon Stick, pretty fast unit and got it for $20 on sale.
 

Tonia73986

Posts: 13   +5
Can you install KODI on ROKU? I love latest Amazon Stick, pretty fast unit and got it for $20 on sale.
I'd like to know that too. I have three fire sticks, one for each TV. I really like them, although the older models are really slow to respond compared to the new fire sticks. Everything I've seen about Roku looks the sme as the fire stick, so what's the difference?
 

That Dude There

Posts: 172   +41
I generally dont understand why rokus are so popular. I have like 4 devices (including a laptop PC which near everyone has) I can connect to a TV that work with streaming services, and almost every TV has their own smart functionality built in now. Additionally there are devices cheaper than roku that do the same thing, and devices the same price as roku that do it better.
I just bought a sharp tv with roku bult into it. I didn’t want roku, but bought it for the ethernet plug.
 

Dimitrios

Posts: 659   +473
I'd like to know that too. I have three fire sticks, one for each TV. I really like them, although the older models are really slow to respond compared to the new fire sticks. Everything I've seen about Roku looks the sme as the fire stick, so what's the difference?
The latest AMAZON STICK is a lot faster then the older one! My friend has the prior gen AMAZON FIRE STICK and the new one does 1080P 60fps very good! No loading or delay. I live in a raised ranch and the down stairs man cave is really far away from my router which is on the other side of the house above two garage doors and wood flooring, many layers of drywall and wood panels. The newer stick has a four core higher clocked chip and more RAM. It does run very hot which I don't like! I mean that baby runs hot! It has a better gpu chip and plays pretty high demanding games. Don't buy the AMAZON FIRE TV that's like $80 that looks like the APPLE TV competitor and heard it sucks for odd reasons like AMAZON is getting cheap and sneaky. NETFLIX loads movies within 2-5 seconds and then runs flawless during a movie at 1080P 50 inch tv I have. AMAZON PRIME MOVIES loads within 5 seconds and smooth and flawless during the whole movie. KODI sucks a little maybe because I have an old version KRYPTON or whatever it is. Loads a movie within 20-40 secs then runs flawless 99% of the time during the whole movie. To be honest after watching about a total of 50 movies on KODI, it froze once and two movies had to buffer for a few secs. Hey can't complain about FREE movies. ALEXA is nice as well. Hold the mic button and ask weather, pause movie, find a movie, song, etc.... Also run Bluetooth and something else and you can add almost any game controller or other accessories. You can link your phone to it as well. Storage is 8GB.
 
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