ROKU just set the record for the highest values IPO this year?

[Flint]

We all love ROKU, but are they the most valuable company to go public so far this year?

Given the fact Apple finally has a competitive solution with the launch of their Apple TV 4K as well as a huge market of customers who buy everything Apple sells AND that Amazon's TV offerings were just updated with improved quality and compatibility, can ROKU grow? I am thinking they won't sustain their value, what do you think?

 

[MakeMineVinyl]

I think the outboard box is going to eventually go away as more and more TVs have that functionality built in. It just makes sense for TV manufacturers to use that inbuilt as a value-add, and there is no real magic in an having an external box do that.

 

[AndySTL]

I sure hope the standalone player doesn't die. I would prefer the ability to upgrade those devices as the technology improves vs. having to by a new TV more often. But it could be going that way.

What I would really like to see Roku do is add an input for an antenna and add an OTA tuner app to their device.

 

[Haywood]

Roku has a play as long as the alternatives keep locking out competitors. Amazon won't get my business so long as there is no UV support, for instance.

 

[Flint]

I sense a theme in your posts.

 

[Haywood]

I sense a theme in your posts.

That is just one example. Until very recently, Amazon actively blocked people from using the Amazon Video application on non-Sony Android TV devices. Apple blocked Amazon too, though that problem appears to be solved. Apple also blocked UV until Vudu created a player app with no capability to purchase content. Google Play does not work on Apple TV or Fire TV. And so on and so forth.

Roku supports multiple competing providers, including Vudu, Amazon, Google Play and others. It is Switzerland and as long as Apple, Apple and Google keep using their devices as weapons of their never-ending pissing contest, Roku will continue to have a market.

 

[Towen7]

I think Roku needs to become a platform to grow.
A system where I have a single Roku account and simply add other services without having to have 37 different accounts.

 

[Haywood]

I think Roku needs to become a platform to grow.
A system where I have a single Roku account and simply add other services without having to have 37 different accounts.

There are rumors that they are working on something exactly like that. There are also rumors that Plex is working on content deals to do that as well. Android TV is also moving slowly in that direction.

 

[Flint]

I think Roku needs to become a platform to grow.
A system where I have a single Roku account and simply add other services without having to have 37 different accounts.

That's something Amazon is already doing with their "channels" program where instead of going out and subscribing to HBO Now or Showtime Streaming, you subscribe through Amazon and they are activated wherever you get your Amazon video content and you are charged through your Amazon Prime account. The pricing is still too high for many of those channels, but it will take time to address that for big existing cable channels who still have contracts with cable service providers.

I hate to say it, but if Apple can own such a huge market for mostly very closed platforms (iOS, Mac, and the Music store), then Amazon could do great without supporting relatively niche platforms which the majority of the market do not recognize.

My point was that the Roku IPO success suggests there are a ton of investors who think they are the early winner in streaming entertainment services. Maybe they can take all this money they just received through this stock sale and invest wisely and leap so far ahead of Amazon, Apple, Google, Sony, and all the others that they do indeed justify the stock price. I seriously doubt it, though. Apple, Amazon and Google, at least, have multiple entertainment relationships with the content creators which allows them to leverage music and movie licensing alongside streaming content. Heck, I am impressed that my Amazon Fire TV devices allow me to search for any show on any service and it will open the app and start the show regardless of where it resides. I don't have to memorize which platform is showing the show I want to watch, I just need to remember the name. Neither of my Roku devices did that well, though it allowed searching, it didn't include every streaming service in the results and I could not start the show from the search results screen.

We'll see. I just think this is an example of an early dot.com bubble issue in streaming services which are years away from stabilizing.

 

[Haywood]

Amazon could do great without supporting relatively niche platforms which the majority of the market do not recognize.

UltraViolet is the official rights locker system supported by every major studio except Disney. The only major players that do not support it are Amazon, Apple and Google. Almost every DVD sold comes with a UV code. It is also heavily backed by Walmart, Sony, Verizon and Fandango. That said, there is an interesting rumor going around.

Disney is in talks with other studios to migrate from UltraViolet to Disney's Key Locker system. They would rename Disney Movies Anywhere to something less studio specific and the other studios would abandon UV and move over. One of the main drivers behind this is that UV has never been able to win over Amazon, Google and Apple, but those providers are already part of Disney's system. If this happens, I assume that all existing UV licenses would simply transfer. Vudu is part of both systems. That means consumers could buy content from any of the four biggest players and watch that content on any or all of them. This would be a huge win. The only real downside (and it is a big one) is that we would lose the ability to share our content.

 

[Flint]

Another lesson, I am fully aware of the UV story, most of my knowledge comes from your very informative posts.

That said, the vast majority of content consumers have no idea what UV is. I a not saying it is good or bad, just that it may not matter to a company whose market value is now $2.6B. In the IPO, Roku received about $143M to invest in their business to grow into a multi-billion dollar company. Let's see what they do with it.

I have doubts they can justify a multi-billion dollar valuation.

 

[Haywood]

From a practical standpoint, UV is Vudu and Vudu is one of four major ownership/rental-based providers, along with Apple, Google and Amazon. All four platforms are already part of Disney's Key Locker system. If the rest of the industry switches over from UV to Disney's system, things will get VERY interesting. There will truly be a single standard shared across all of the major content providers, allowing consumers to choose services and devices without regard for where their personal content may reside. It means that Apple users could opt for a Fire TV or Amazon users could grab an Apple TV to go with their iPhone. This would be the best possible outcome for most consumers.