Roku is known as a leader in the world of streaming media players and now smart TVs, yet increasingly Roku is an ad company. The next time you see a streaming ad it is more likely that that ad comes from Roku.
In the first half of 2017 Roku reported that 41% of their revenue came from advertising sales. Roku also reported that 43% of all Roku streams were ad supported.
Roku offers their streaming players starting at just $30 a far cheaper option than the Apple TV at $150. So far that has paid off for Roku, because over half of all streaming player sales in the United States are Rokus.
Roku then turns around and sells ads on a long list of streaming services. Roku even offers a full-time sales team to help smaller networks sell ads on their streaming services. These smaller networks get the ability to monetize their streaming services, and Roku gets a cut of the sale.
To help push their ads Roku recently launched their own free movie and TV service called The Roku Channel. This Roku Channel streams a growing list of movies and TV shows for free as long as you are willing to see ads.
To help get their ads on more devices, Roku now also offers to let other smart TV makers use their Roku TV OS freeing the TV manufacturers from the cost of maintaining the OS. Roku in turn gets a larger install base to sell ads against.
This ends up being a win-win all the way around. Roku gets more units. TV manufacturers get the ability to manufacture TVs without the high cost of building or maintaining the OS, and the end user gets a less expensive device and access to more free content. (Though if you don’t want to see ads you can always subscribe to a paid service such as Netflix or Amazon Prime Video.)
Source: Forbes
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