I started a position in ROKU earlier this year.
I see:
-growing TAM as more TV is consumed digitally and on demand, cable cutting grows
-platform revenue, active accounts, streaming hours, rev. per active account growing nicely
-leading independent platform for digital TV consumption
-being built into smart TV’s gives platform advantage
Unfortunately, I sold my position before the last earnings report for 2 reasons:
-
Amazon/apple/google are starting to play nice with each other, letting each others apps back on their respective platforms. I see this as reducing Roku’s competitive advantage of being an independent platform
-
ROKU is dependent on the smart TV makers to continue putting the ROKU player into their smart TV’s
My main concern is #2. I think ROKU’s success is dependent on their ability to have their technology in the smart TV’s. So far so good since they have about 1/3 of the smart TV market and growing. However, I don’t like that (to me) their future is highly dependent on what the smart TV makers decide, somewhat out of their control.
What if smart TV makers cut them out? What is the incentive for the TV manufactures to keep ROKU? What if they switch to using google/apple/amazon tech in their TV’s?
Looking for other opinions on the likely hood that ROKU continues to be in and grow its tech in smart TV’s.
Thanks,
Jim