1. Is Roku Looking Into An IPO?
Rumors are afloat this week that internet streaming device manufacturer Roku is looking to launch an IPO this year, in an attempt to raise $1B. They are allegedly looking to use this money to expand their advertising and licensing businesses, both of which are higher revenue than just selling consumer devices. There’s also a sizable data play available for Roku, should they want to go there.
Why It Matters
Roku is truly the Little Streaming Device That Could. They have succeeded against some pretty amazing odds: their main competitors are three of the four largest tech companies: Apple, Amazon and Google. And yet the latest ComScore stats show that Roku has around 42% market share, versus 28% for Amazon, 18% for Google Chromecast and 12% for Apple. That’s not even including the 13% of TV sets that have the Roku OS embedded inside.
Their success boils down to two words: User Interface. Of all the streaming devices, Roku is far and away the easiest to navigate with the most channel options. That’s a huge advantage in a market where there’s still a whole lot of technophobia.
The fact that their devices are priced fairly helps too.
They’ve also been helped tremendously by all the avoidable mistakes their competitors have made. The Fire Stick’s interface was confusing when it was first launched and while it’s somewhat better now, it’s still barely mediocre. Apple TV is ridiculously expensive and lacked Amazon and most niche channels. Chromecast lacks a remote which makes it confusing to operate.
The advertising piece of Roku is very interesting to us in that they are able to sell addressable advertising on network apps (there’s already a pilot program with A+E) and that may well be how networks finally make peace with the notion of addressable advertising.
Roku and its interface are particularly well suited for the Library Age, when MVPD program guides move from being time-based to being library-based (“What’s On Now?” to “What Do You Want To Watch?”) and their ability to allow content owners to reap ad revenue from time-shifted and device-shifted viewing could be one of the keys to keeping the industry afloat.
The fact that they are independent helps them tremendously here, as no one feels that by working with Roku, they are giving a key competitor a leg up. Roku still has a long way to go to make their ad product scalable enough and useful enough to actually have an impact on the entire TV ad ecosystem, but a $1B cash influx should certainly help them get there.
What You Need To Do About It
If you’re an MVPD or anyone else considering a virtual pay TV app, make sure you launch on Roku first (looking at you, Hulu). It’s far more popular than other devices, cheap enough that you could give away the $30 version as a white label product and farthest along the addressable advertising path. All good reasons to make Roku your go-to device.
If you’re a network, you’ll want to launch your OTT app on Roku for all the reasons stated above.
And if you’re an advertisers, you’ll want to talk to our friend Scott Rosenberg at Roku about what advertising options they have for you, both traditional and advanced. It’s a good idea to get in on the ground floor on this one as we believe Roku will be the wave of the future.
2. The Leftovers and BoJack Horseman Don’t Get Much Emmy Love
Two of the best series on TV, HBO’s The Leftovers and Netflix’s BoJack Horseman were pretty much shut out at the Emmys this week, each only receiving a single nomination, for a guest star role and a voiceover, respectively.
Both series were wildly and widely praised by critics, who had them on a range of “Best TV Show” lists—BoJack scored with everyone from Time to Variety to IndieWire.
That doesn’t matter as much to Emmy voters, who, interestingly enough, represent a broad range of “types” and whose tastes are more reflective of what’s popular across a wide swath of much segmented nation than the more highbrow shows that the coastal media types typically go for.
Or, to put it another way, there’s a reason Danielle Steele’s mass market romances outsell Tom Perrotta’s literary fiction novels and why This Is Us beat out The Leftovers.
Why It Matters
As everything else in the U.S. becomes more and more bifurcated, (read Richard Reeves’ most excellent Dream Hoarders for more on that) our taste in entertainment is also becoming more extreme. For years, TV had to cater to the vast middle, but with new monetization systems (e.g., subscription models) the industry was able to cater to a range of different tastes.
It’s important to remember though, that as much as we may love shows like The Leftovers and BoJack Horseman, part of the reason we love them is their subversiveness, the fact that they are anything but mass market entertainment.
So when the Emmy voters remind us of this, it should not come as any surprise, and we should not take it as a rebuke.
What You Need To Do About It
If you’re a network, remember that there’s a whole market full of Danielle Steele readers out there and that thanks to recommendation-based interfaces and niche marketing, you can reach them as well as the more upscale audiences—now is the time when you can be all things to all people. You just need to make sure your network’s brand image remains constant as you expand.
If you’re an advertiser, don’t be so quick to write off broadcast TV audiences as too old and too poor. They still have money to spend on your products and there are plenty of network viewers who more than defy those stereotypes.