Updated May 22, 2018

The next big TV tech platform: Roku

Roku user interface Credit: Roku

Roku, the connected TV hardware company, is quietly building a large software business, driven mostly by advertising revenue.

Why it matters: For the first time in its history, Roku says that last quarter it made more money from its platform business, which includes TV software and advertising, than from hardware through sales of its connected TV device.

  • The money it makes on digital services, like digital TV software and advertising, is now 55% of Roku's total revenue.
  • Platform revenues more than doubled Roku's ARPU (Average revenue per user) year over year — an astounding growth rate for a 16-year-old company that just went public less than a year ago.
  • The company is expected to bring in more ad revenue by 2020 than rival Hulu and other digital advertisers, like IAC, which owns sites like ask.com, Tinder and The Daily Beast, according to projections from eMarketer.
“Ad-supported viewing is the fastest growing segment on our platform ... Roughly half of our 21 million active users have cut the cord or have never subscribed to pay TV. These viewers simply cannot be reached through linear TV anymore ... [Over-the-top] advertising enables marketers to continue reaching these new TV viewers, and will eventually attract a majority of TV budgets.
Scott Rosenberg, GM/SVP Platform Business at Roku

Roku typically doesn't sell advertising through an open exchange (open bidding system), like some of the big tech companies do, but it does use programmatic infrastructure to digitally target those ads — a tactic commonly referred to as "programmatic direct" or "programmatic reserved."

  • By selling the ads directly to ad buyers, they are appealing to ad buyers who are used to buying TV in a non-automated fashion.

Roku launched The Roku Channel last year, which executives say contributes significantly to its ad inventory. The free channel, which syndicates content from other networks, is currently the third most-watched ad-supported channel on Roku.

The software play: Just as mobile hardware companies like LG and Samsung eventually migrated off of their own software platforms to market leaders' like Android and iOS, Roku CEO Anthony Wood argues that the smart TV industry is going through the same evolution.

Worth noting: Despite its push to software, Roku continues to beat out rivals Chromecast, Amazon Fire TV and Apple TV in connected TV device market share, according to eMarketer.

Go deeper

The cracks in Trump’s GOP shield

Photo Illustration: Sarah Grillo/Axios. Photo: Doug Mills-Pool/Getty Images

President Trump’s mockery of coronavirus masks, his false claims about the dangers of voting by mail and his insinuations that a cable TV nemesis was involved in a murder are testing more high-profile Republicans' willingness to look the other way.

The big picture: Republicans learned a long time ago how dangerous it is to alienate Trump’s base — which is why any hint of disagreement, even a whisper, is so remarkable when it happens.

Updated 2 hours ago - Politics & Policy

U.S. cities crack down on protesters

The scene near the 5th police precinct during a demonstration calling for justice for George Floyd in Minneapolis on Saturday. Photo: Kerem Yucel/AFP via Getty Images

Major U.S. cities have implemented curfews and called on National Guard to mobilize as thousands of demonstrators gather across the nation to continue protesting the death of George Floyd.

The state of play: Hundreds have already been arrested as tensions continue to rise between protesters and local governments. Protesters are setting police cars on fire as freeways remain blocked and windows are shattered, per the Washington Post. Law enforcement officials are using tear gas and rubber bullets to try to disperse crowds and send protesters home.

Updated 2 hours ago - Politics & Policy

George Floyd protests: What you need to know

Photo: David Dee Delgado/Getty Images

Clashes erupted between law enforcement and protesters in several major U.S. cities Saturday night as demonstrations over the death of George Floyd and other police-related killings of black men spread across the country.

The big picture: Floyd's death in Minneapolis police custody is the latest reminder of the disparities between black and white communities in the U.S. and comes as African Americans grapple with higher death rates from the coronavirus and higher unemployment from trying to stem its spread.