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Photo illustration: Axios visuals

Coming off of a stellar first earnings report as a public company, Roku CEO Anthony Wood says the future of Roku is smart TV software, not its connected TV hardware product that it's most commonly known for. Per eMarketer, more Americans use Roku's connected TV device than any other similar device, like Chromecast, Amazon Fire TV or Apple TV.

Why it matters: Just as mobile hardware companies like LG and Samsung eventually migrated off of their own software platforms to market leaders' like Android and iOS, the smart TV industry is going through the same evolution. Roku is priming itself to be the next big software platform for smart TVs. The shift creates new revenue streams for Roku that can be scaled very quickly, including software licensing and digital TV advertising.

  • "Our hardware business is meant to drive scale to our software platform," Wood told Axios. "We make most of our gross profit from our platform business." One in five of all all smart TVs sold were powered by Roku's operating system last quarter.
  • A whopping two-thirds of Roku's platform revenue last quarter came from video advertising served on ad-supported channels."TV advertising compared to the tech and techniques in digital is stuck in stone ages," Wood says. "We have a very advanced ad platform that gives advertisers the ability to use digital targeting techniques while leveraging the benefits of a TV advertising big screen."
  • The Roku Channel, an ad-supported movie and TV show network, just launched to support ads. A lot of people think streaming is about ad avoidance, but 40% of streamed viewing has ads in it," Wood says.
  • "Consumers looking for free content," says Wood. "People move to streaming to save money. We don't believe that they're going to replicate the amount they paid for cable with streaming. Rather, it will be a mix of SVOD (streaming video on demand) like Netflix, and free streaming options."

Note: This post has been clarified to show that two-thirds of Roku's platform revenue (not overall revenue) is from video advertising last quarter.

Go deeper

Biden's pick to lead major banking regulator drops out

Saule Omarova, nominee for Comptroller of the Currency, at a confirmation hearing on Nov. 18. Photo: Anna Moneymaker/Getty Images

President Biden's pick to head one of the country's most powerful banking regulators is dropping out of consideration for the post, according to a statement from Biden that accepted the withdrawal.

Why it matters: Saule Omarova, nominated to lead the Office of the Comptroller of the Currency, faced a tough path to confirmation — with opposition from Republicans and moderate Democrats.

Judge temporarily blocks Biden vaccine mandate for federal contractors

Photo: Chip Somodevilla via Getty Images

A federal judge on Tuesday temporarily blocked President Biden's vaccine mandate for federal contractors nationwide.

Why it matters: It's the latest setback in the Biden administration's rollout of COVID-19 vaccine requirements. Federal judges in two states temporarily barred the administration from enforcing mandates for millions of workers last week.

Biden threatens Putin

Photo: Kremlin Press Office/Handout/Anadolu Agency via Getty Images

In a video call that lasted for just over two hours on Tuesday, President Biden warned Russian President Vladimir Putin that if Russia invades Ukraine the U.S. will impose unprecedented sanctions and provide additional weaponry to the Ukrainians, national security adviser Jake Sullivan said.

Why it matters: Russia's military activity on the border with Ukraine has triggered alarms from the U.S. and its European allies of a potential large-scale Russian invasion in early 2022. Sullivan said Biden made clear to Putin that, "things we did not do in 2014, we are prepared to do now."

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