Roku On The Verge of Expansion

Streaming media specialist, Roku, filed for its IPO (Initial Public Offering) at the beginning of September with the hopes of initially raising $100 million for future expansion. Within the period of a month, investors have purchased as much as $219 million worth of stock, over 119% more than their initial expectations, and propelling the company to be valued at $2.1 billion.

Roku is one of the first streaming media devices to hit the market and quite possibly were the company to established it as a new category altogether. They have been operating for over 9 years, originating strictly as a Netflix player, but has since then accumulated over 1000 streaming channels, including free, paid subscription, rental or purchased content. They reportedly have 15.1 million active users as of June this year and commands 37% of streaming-media market share, staving off major competition from the likes of Apple, Amazon and Google.

With their new windfall of cash, Roku has aggressively slashed the prices on some of its devices, with affordable hardware starting at a mere $30, and they’ve also added a new product with 4K and HDR capabilities for just $70. This could help them expand their audience, whether it’s current users replacing their older devices or expanding onto more television sets.

Personally I own one of their older devices, and I am generally pleased with it. However, while they claim that there are over 1000 channels, the reality is that only a handful are genuinely worth watching (to my tastes at least). And those that are worth watching are most likely on competitor devices as well. In some cases, the core channels are directly provided by rivals, such as Amazon Prime and YouTube, by Amazon and Google respectively. Therefore Roku has to innovate in an increasingly competitive market. Rumor has it that they may be adding more ad-supported, free channels, this is great news however, content and exclusivity is just as important. Some of the other companies are beginning to create their own content, will Roku go down this road? Or can they come up with something completely different?

Another potential problem that they can consider resolving, is the fact that a lot of content is region blocked, meaning that it is geographically restricted worldwide. This is a major hindrance to potential consumers who aren’t aware of workaround methods, or hassle and possibly an additional cost for those who those who do know how.

It may not be long before we hear of Roku’s general intentions, but let’s hope that with their new invested capital, they can genuinely disrupt the industry and create new experiences. What do you think, does it sound intriguing? Or is the industry already facing maturity and is about to decline, leave a comment below.