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Monday, September 1, 2014

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  • Scrappy Roku Makes More Deals, Keeps Elbowing Its Way Into the Big Leagues

    You gotta love Roku. In the insanely competitive world of consumer devices - where the big boys like Microsoft, Google, Apple, Amazon, Samsung, Sony and others have enormous retail, financial and existing customer base advantages - little Roku just keeps on cranking out inexpensive, yet solid products, meaningful partnerships and scads of content deals, establishing itself as a leader in the connected TV space.

    The latest evidence of Roku's momentum are two announcements at CES today; first, that it has signed up another 6 "Roku Ready" TV manufactures as partners whose models can accept the company's "Streaming Stick" device and second, that it has signed new video channel partners Blockbuster on Demand, Dailymotion, DISHWorld, Flingo, Fox Now, PBS, PBS Kids, Syfy and VEVO. All of these channels bring to 700 the number of video and audio choices in the Roku Channel Store, a breadth that easily rivals - though is clearly distinct from - today's pay-TV services.

    And in the last piece of CES news, Roku also announced that it has integrated with Time Warner Cable's "TWC TV" service, which means that TWC's customers who have a Roku device would be able to get the full lineup of 300 live TV channels on their TV. Roku is the first connected TV device outside of computers, iPad/iPhone and select Android smartphones/tablets to stream TWC TV.

    The win here for consumers is that they can watch pay-TV in rooms where they didn't have a TWC set-top box, which means for a one-time Roku purchase they can then avoid the annoying monthly rental fee the extra STB carries. For TWC, Roku helps extend its service but without costly truck rolls and is further validation of its TV Everywhere strategy.

    The TWC TV deal points out an important new opportunity for Roku, which is to broaden its positioning beyond the traditional "OTT-only" to one that also enables delivery of incumbent pay-TV services. This is strategic for Roku because it allows the company to draft off of the inherent strength of pay-TV, which continues to chug along pretty well, despite the media's dire warnings of cord-cutting. In short, by being a friend, not a foe, of pay-TV, Roku gets itself into the slipstream of TV Everywhere, the pay-TV industry's most strategic initiative.

    To the extent Roku further penetrates the pay-TV industry, it also becomes a potential platform/OS partner for the industry (and for TV manufacturers for that matter) strengthening its position vs. Google TV, and eventually vs. Apple. True Roku today doesn't have a bona-fide multi-platform app model like iOS or Android/Google TV/Google Play, but if it had a foothold in the TV world, one could easily envision Roku expanding out. All of that could be appealing to pay-TV operators who are extremely wary of both Google and Apple in the living room.

    All of that is just speculation though. For the here and now, Roku continues to prove it's more a work horse than a show horse. In an industry rife with vaporous products, Roku has methodically rolled out new devices, partnerships and content, while keeping prices low and appealing to the masses. Its UI isn't the most elegant one around, but for basic navigation it's just fine. Meanwhile, it's creating numerous options for itself down the road.