Roku: Rising Competition From Partners

Summary:

  • Competitive pressures from OEM partners may have forced a shift in Roku’s strategy.
  • Hardware initiatives are unlikely to create value by themselves and should be viewed as a customer acquisition strategy.
  • Continued weakness in the digital ad market along with reduced consumer spending on electronics means Roku may face a difficult 2023.

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Roku (NASDAQ:ROKU) could be a large beneficiary from the shift to streaming, but the company has to find a way to secure distribution of their operating system without giving unduly large incentives to customers and partners. While the platform side

Legacy Pay TV Households in the US

Figure 1: Legacy Pay TV Households in the US (Roku)

Viewership versus Ad Budgets on TV Streaming

Figure 2: Viewership versus Ad Budgets on TV Streaming (Roku)

US Traditional TV Ad Scatter Spend (YoY Change)

Figure 3: US Traditional TV Ad Scatter Spend (YoY Change) (Roku)

Roku Smart Home Subscriptions

Figure 4: Roku Smart Home Subscriptions (Roku)

Roku Revenue

Figure 5: Roku Revenue (Created by author using data from Roku)

Roku Accounts

Figure 6: Roku Accounts (Created by author using data from Roku)

Roku Streaming Hours

Figure 7: Roku Streaming Hours (Created by author using data from Roku)

Roku Segment Gross Profit Margins

Figure 8: Roku Segment Gross Profit Margins (Created by author using data from Roku)

Roku Operating Profit Margins

Figure 9: Roku Operating Profit Margins (Created by author using data from company reports)

Roku Operating Expenses

Figure 10: Roku Operating Expenses (Created by author using data from Roku)

Sales and Marketing Expenses Minus Player Gross Profits per Additional Active Account

Figure 11: Sales and Marketing Expenses Minus Player Gross Profits per Additional Active Account (Created by author using data from Roku)

Roku Job Openings

Figure 12: Roku Job Openings (Revealera.com)

Roku Relative Valuation

Figure 13: Roku Relative Valuation (Created by author using data from Seeking Alpha)


Disclosure: I/we have a beneficial long position in the shares of ROKU either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.


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