Tuesday, September 16, 2014, 10:33 AM ET|Posted by Will Richmond
Roku has announced that it has sold over 10 million of its players in the U.S. cumulatively since it shipped its first one in 2008. Roku last reported sales of 8 million units in January '14, which means the company has sold approximately 2 million units year-to-date (Roku has previously said it sold around 3 million units for all of 2013).
Roku was an early entrant in what has developed into an intensely competitive connected TV space. Apple, whose Apple TV device was famously referred to as a "hobby" by the company (though no longer) has over 20 million users. Google hasn't released any numbers for Chromecast yet, but undoubtedly its sales are well into the millions also (Google is also launching Android TV). And Amazon launched Fire TV this past spring.
According to Roku's own research, the company's devices stand up well to the competition, accounting for an aggregate 37 million hours of video streamed per week, leading Apple TV (15 million hours), Chromecast (12 million) and Fire TV (6 million). The Roku research also said Roku achieved the highest score for likelihood to refer to a friend.
But even as consumers evaluate these choices, if they're in the market for a new TV, the price increase is now relatively small for buying a smart TV which provides access to all the most popular video apps. For example, my father is currently looking for a 32-inch HDTV with one of his primary planned uses for it to watch Netflix. He can buy a Samsung smart TV for just $30 more than the comparable conventional TV, which is less than the cost of the least expensive Roku and about the same as a Chromecast.
In fact, as the OTT service with the most long-form content and biggest subscriber base, Netflix is arguably at the core of the connected TV surge. Roku's CEO Anthony Wood told me earlier this year that Netflix has the largest share of viewing time on Rokus, though it's declining. Thus, while Roku offers over 1,800 channels of content now and says it has streamed a total of 5 billion hours since launch, as I peruse the choices on my Roku (most of which I've never heard of), there must be a massive "long tail" with the vast majority of channels getting negligible viewing.
Going forward, the connected TV category is poised to become more competitive. Google and Amazon have clearly made it a priority as part of their larger ecosystem strategies. While Apple has had early success with Apple TV, arguably the company still doesn't have a digital living room strategy, a situation which cannot be permanent, especially given CEO Tim Cook's recent comments that "TV is stuck in the '70s."
All of this means Roku almost certainly faces a tougher environment for standalone devices ahead. No doubt recognizing this, Roku has wisely expanded into smart TVs itself, recently launching the line of Roku TVs with several Chinese partners. And it is pursuing pay-TV partnerships with its new "Roku Powered" platform licensing program (note, there have been no recent updates on Roku's deal with Time Warner Cable for TWC TV announced at CES 2013).
As consumers adopt more long-form online video and content choices explode, Roku will continue to benefit. But offsetting this will be the increase in competition. Roku has been a nimble to date and we'll see if it can continue its success.