Here’s a good Fool article on Roku including a little more from the Needham analyst (Laura Martin): https://www.fool.com/investing/2019/12/04/countering-morgan-…
Highlights!
[Martin] “In 2020, Roku’s key upside valuation driver will be accelerating subscription SVOD revenues, which lowers investment risk, we believe,” the analyst wrote in a research note to investors. “Additionally, Disney+, Apple+, Peacock/[Comcast] and HBOMax/AT&T should accelerate customer acquisition spending, and Roku is a key beneficiary owing to its installed base of 32 [million] US connected-TV homes.” So Niki, she agrees with you about the sign-ups but sees it as a positive.
Needham compares Roku to other content aggregator platforms like Alphabet’s YouTube or Apple’s iOS, suggesting that Roku will ultimately become the “winning aggregator of TV and films” in the same way that YouTube is the dominant tech platform for user-generated videos. So she agrees with me they’ll win “the streaming wars.” (I realize I should have resisted my temptation to re-appropriate this term. It was confusing. My bad.)
The author of the Fool piece, Evan Niu, answers your gross margin question: It’s worth noting that Roku is new to selling premium subscriptions; the company only started offering third-party subscriptions in January. Roku has been coy about sharing many granular details around the growing premium subscription business but does note that premium subscriptions carry lower gross margin than other parts of the platform segment.
He ends with another quote from Martin: The analyst adds, “Any OTT service trying to get new subscribers (or viewers to watch their free content) must spend more ad dollars on Roku or risk ignoring 40% of connected TV homes that their competitors are reaching.”
Our board’s own buyandholdisdead talked to TTD’s Investor Relations about Roku last Fall, and they seem to agree – TTD likes and believes in Roku. https://discussion.fool.com/i-asked-telaria-a-week-ago-how-they-…
Bear