Roku on Thursday said its most-recent earnings quarter ended with the company logging 55.1 million active user accounts, a growth of more than 1.5 million accounts over a three-month period ending in July.
The figure represents a slight slowdown in growth for the company, with Roku adding 2.4 million accounts in the previous quarter and 3.2 million accounts during this same quarter last year, but the large number of users served by Roku helps keep the company’s position as one of the most-dominant streaming platforms in the industry, neck-and-neck with Amazon Fire TV.
Roku manufactures smart TV hardware for every budget — from the bare-bones high-definition Roku Express at just $30 (a price that is often discounted) to the premium Roku Ultra at $100.
The hardware runs a custom operating system developed by Roku. It offers access to the most-popular streaming video and audio applications, including Netflix, Hulu, Disney Plus, Amazon Prime Video, Showtime, Starz, YouTube, Sling TV and Philo.
Roku also allows third-party television set makers to license its operating system, allowing ordinary TV sets to become “smart” ones with direct access to the same applications (Roku calls them “Channels”) found on Roku’s own set-top boxes.
During a conference call with investors and reporters on Thursday, Roku’s chief executive said the company is currently the dominating operating system on smart TV sets sold in the United States (Samsung is the dominant player internationally), and that licensing scheme will play a big factor in the company’s strategy going forward.
“There are a billion households around the world that have broadband and watch TV,” Anthony Wood, Roku’s chief executive, said on the call, according to the website Fierce Video. “The real question is market share for smart TVs, and we’re the number one in the U.S., and we’re number one in the markets we’re entering. We’re doing extremely well, so I would say there’s still lots of potential for active accounts.”
Roku’s hardware sales are not the only thing generating revenue for the company: Roku also has a robust advertising solution for streaming video providers, one that is used for its own free, ad-supported streaming service called the Roku Channel.
Roku also offers a native payment processing feature called Roku Pay, which developers can tap to give customers a frictionless way to sign up for premium streaming subscriptions (Roku takes a cut from every subscription processed through Roku Pay).
The company also requires some app developers to sign software distribution agreements, similar to a carriage agreement found between cable operators and programmers — a strategy that has, occasionally, made certain services like Comcast’s Peacock and AT&T WarnerMedia’s HBO Max unavailable to Roku users at launch.
Currently, Roku is engaged in a distribution dispute with Charter/Spectrum and Google’s YouTube TV, which has prevented some Roku users from accessing those services (Google eventually integrated YouTube TV into its YouTube video app, which remains available on the platform).
Though some customers have vocalized their displeasure with Roku’s strong-arming of some developers, investors and other users seem largely unfazed: Roku’s stock price skyrocketed during last year’s pandemic, and not enough customers switched from Roku to a competing platform in order for the hardware maker to lose its market share.
In a letter to shareholders this week, Roku said the majority of developers who are launching direct-to-consumer streaming services “are leaning into the Roku platform, leveraging key tools like Roku Pay and performance marketing to successfully build their streaming services.”
“[They’re] driving results that are exceeding expectations for both Roku and our partners,” the company said. “Media and entertainment promotional spending…grew significantly faster than the overall platform during [the second quarter].”
