Some random facts to help further tell the $ROKU story. My earlier post ---- https://discussion.fool.com/roku-34679729.aspx?sort=whole#346797… and also on my Substack (https://jaybahel.substack.com/p/lets-talk-roku).
(1) Upfronts. Let me start by stealing from my own prior commentary. “When released from their annual TV upfront commitments, marketers took the opportunity to reallocate advertising spend more aggressively toward TV streaming. We have also closed 2021 Upfront deals with all six major agency holding companies at significantly increased levels of commitments.” LETS NOT DISCOUNT THAT. 2019 Upfront advertising spend in billions from 2016 through 2019 was $18.6Bn, $19.7Bn, $20.7Bn, and $21.2Bn respectively. 2020 was estimated at $21.6Bn ---- but who knows how that actually played out this year w COVID. Remember, ROKU generated $319M in “platform revenue” this last quarter. That’s a massive runway cleared for growth w Upfronts alone ---- and Anthony and team have started the ascent up the “Upfronts” runway.
(2) Ad execs are going to be pressured to spend their $$$. It’s not all going to go to mobile on FB, SNAP, etc., Those are all nicey nice ---- but TV is where these ad execs want to spend their $$$. And they are going to increasingly get pressured to do it on CTV. HEY, where are the eyeballs at? Hmmmmmmmmmmmm. Foreshadowing. 
(3) Look at what Roku is doing on their home screen. The level of advertising they are doing is just plain awesome. Not just on the right hand side of the home screen (awesome real estate). But also throughout the entire desktop. Look at how WandaVision took over the whole home screen ---- check out the screenshot at https://morganmagazine.files.wordpress.com/2021/01/f23jojylf…. What did Dis+ pay for that?!
(4) Then look at all the would you like fries w that opportunities that they are popping in the Roku Channel. Things like this w EPIX. https://therokuchannel.roku.com/browse/w.D9JY3qPBozs2Deawaeo…
(5) Look, you may not think Roku channel is any good. But hey, just follow the numbers on Roku Channel. There are now 61.8M Roku channel accounts ---- more than their active membership. AND, the accounts on it grew 14% QoQ. WHOA. I mean, WOW. Remember, in the last Q, they said it was their fastest growing app in the Roku network. Its streaming hours grew faster than any other top 10 channel on the ROKU platform on a YoY growth basis.
(6) Then think about platform revenue from newly inked deals. Dis+ comes to mind. Remember, Disney themselves would say they wouldn’t have had the SUPER FAST success they did without Roku…………… Mandalorian was #1 Christmas week on the Nielsen ratings. https://www.nielsen.com/us/en/top-ten/ What does that do for the Roku flywheel? Then think about the other newly inked deals ---- HBOMax…can you say Wonder Woman (even if it was crap content…it generated a ton of viewership). Then, there’s Peacock. Hey, the Office is number 2 on the Nielsen ratings.
(7) Back on Dis+. In Q4, Netflix had 57.2M global app downloads versus 53.5M for Disney+. Look, people are paying MORE on CTV than they were on linear. How much is your CTV bill?! It’s a big deal. In this house, we have ESPN+, Dis+, Netflix, Hulu, HBOMax. Okay…………. Eyeballs baby, eyeballs…
(8) “In 2020, US CTV ad spending will total $8.11 billion and will increase to $11.36 billion in 2021. By 2024 it will reach $18.29 billion, more than double the amount spent this year.” Pretty cool article that Beth Kindig found ---- https://www.emarketer.com/content/us-connected-tv-advertisin…
(9) A Spectrum spokesperson told us, regarding the contract expiration: “Roku is an important partner and we are hopeful we will reach an agreement soon.” Does this messaging sound familiar?! We know how that “negotiation” will end. https://www.newsobserver.com/news/business/article248605960…
(10) Daily average viewing time for linear TV users is also down 16% and these two metrics suggest “times are changing” in the advertising industry, Carpenter wrote in the note. Do you think people are going back to Linear? I don’t think so. Look, people are now watching 3.7 hours of TV on Roku per day. Did I mention eyeballs?! That probably drops post pandemic ---- but heck, even if it does…that serious engagement time for advertisers. Interesting point around engagement and what will no doubt be a snowball effect for advertising execs ---- The numbers in Beachfront’s study speak to that: a 97% completion rate on connected TV ads, with 100% viewability. “These apps are TV apps,” Sinton notes. “There’s no ‘below the fold’ and viewers are comfortable with the idea of TV-style programming having ad breaks. Plus they’re engaged and want to see the rest of the show. That’s a huge differentiator from mobile.” , Mic drop. Wait, but not yet.
(11) Advertisers have been investing around $65 billion annually in Linear TV despite an estimated 24% reduction in PayTV households over the past seven years. Look – advertisers are going to need to show ROI. And they are going to be pressured to continue to spend on TV ---- it ain’t all going to mobile. And they want EYEBALLS. Hello Roku……… You are the big dog Roku ---- you WIN in the US, you win. Mighty mighty Roku. https://blog.roku.com/50-million + https://blog.roku.com/roku-tv-os-announcement.
(12) So, look, do the math. The opportunity from ARPU and growth on Platform revenue is just getting started ---- $27 ARPU (up 8% QoQ ---- largest acceleration in years). Smaller ARPU compared to $NFLX of $144. But, actually believe they will eventually eclipse $NFLX ARPU. Will Roku keep their leadership position in the US? Not sure. I think they can. Investment is key. Will they win internationally? I think they can win in Brazil and Mexico. They are on a good path there. UK? Maybe. Elsewhere, that’s going to require significant investment ---- and they haven’t put the $$$ forth…YET. Ophir Gottlieb thinks they should do a secondary. I’d be on that bandwagon. Remember, NFLX pays for all that content ---- Roku…well, no. Platform revenue will start falling to the bottom line more and more ---- particularly as margins are picking up. But ARPU is going to likely go up, significantly in 2021 (Analyst Cory Carpenter notes Roku’s “significant advertising opportunity” and expects TV ad budgets to “meaningfully shift to streaming in 2021.”) I agree w him.
$ROKU is up 27% YTD ---- let that sink in for just a moment… $54Bn mktcap in a near $1Tn TAM. They still have a lot to prove ---- BUT, hey, I know a guy here on this board that often says… Follow the numbers
DISCLOSURE: $ROKU position 24%. I’m also content to let my remainder 4.6% $TTD ride.