Has ROKU Read The Future Of Streaming Services?

 

From humble beginnings as a set-top box manufacturer for Netflix, to a booming slice of the streaming market during the global health pandemic, ROKU hasn’t done too badly for itself.

It’s not exactly news that streaming services overall are one of the few arms of the entertainment industry that have seen positive growth through the global health crisis.  Super-streamer ROKU has opted for a slightly different approach to the standard subscription model, however. Instead, they’ve opted to go with an advertising-based revenue stream. Commercials for ad-supported services and a share of the PPV and subscription service revenue on offer through its streaming sticks comprise the bulk of its revenue. In this way, it’s consolidated and leverage many streaming services for one smart package.

While it seems to break the subscription service model, we’re also seeing consumers turn away from subscription only. It’s not all that surprising. Entertainment budgets are no longer as liberal as they were, and people are willing to tolerate ads if it means they can access new content for free. It seems ROKU was aware that consumers would eventually reach a cap on how many subscriptions they will float and have positioned themselves as needed.

In fact, it’s the very demographic that has already canceled traditional TV services (or never signed up for them before) that ROKU is courting. It seems to be working for them. They’ve seen a 43% year-on-year growth, with a 2.9 million jump inactive user accounts to 46 million in the last quarter alone. Revenue per user is approximately $27, a 20% increase on the same quarter in 2019. And this is with a primarily U.S/Canadian user base. They have only just begun to focus on international expansion.

It’s certainly an impressive growth spurt and seems to be partially driven by smart prediction of market direction instead of a fixation on subscription models that many other streaming services use. Whether or not this shift in trends will cause an industry-wide revolution remains to be seen, but it will be fascinating to watch.