Why can’t Wall Street figure Roku out?
So Apple announces that their TV product, the long-awaited Apple TV+ is going to launch soon at just $4.99/month, with a free year-long trial for anyone buying a new Apple product.
And Wall Street reacts by sending Roku stock plummeting.
Roku, in case any financial types are reading this, is going to be distributing that Apple TV+ product. In fact, Roku and Amazon Fire TV are likely to be the two largest distributors since they control the lion’s share of the OTT operating system landscape.
(It’s unclear which company is actually in the lead, but either way, that lead is just a couple of percentage points at best.)
In addition to owning the connected device market, the Roku OS powers about 30% of the smart TVs sold in the US, via Chinese manufacturers like Hisense.
Amazon is looking to get in on that action too, and has struck a deal with Best Buy to have Fire TV power many of its Insignia TVs.
So one more place Apple can’t play.
And then there’s the price of the actual Apple TV device, which more or less ensures that they will continue to lose market share to Roku and Amazon: It’s $180 or $200, depending on which model you get.
Versus $30 for Roku and Amazon, $60 if you get the jazzed up models, $15 if you bought it during Prime Week. (And no, the Apple devices aren’t any better than the Roku and Amazon ones. Which makes the fact that they’re six times the price even more mindboggling.)
Or to look at it another way: Walmart sells this 43-inch Hisense 4K UltraHD TV with built-in Roku OS for $228 or just $28 more than you’d pay to go home with the high end Apple TV puck (beautifully packaged though said puck may be.)
There’s also the fact that Roku doesn’t have any original programming. Their Roku Channel is one of the FASTS—Free Ad-Supported Streaming TV Services—and so would be a complement to Apple TV+, not a competitor.
Roku makes a sizable percentage of profit from selling advertising, but it’s unlikely that the eight shows Apple is releasing are going to significantly impact the amount of ad-supported TV anyone is watching.
So WTF Wall Street?
Basically it comes down to a fundamental lack of understanding about how the television industry works in an OTT world, a misunderstanding compounded by a tech press that constantly proclaims the death of television and talks about the “massive wave” of cord cutting as if it were fact.
The launch of Apple’s TV+ platform is unlikely to have much of an affect on Roku’s bottom line, and in the event it does have an effect, it will be a positive one, since Apple TV+ will be available on Roku and Roku-powered devices, which may get more people to buy them.
Buy low, sell high