Roku has become one of the streaming industry’s new big success stories. Roku was founded in 2002, and in 2008 began building its own streaming video devices thanks to a significant investment from Netflix. The company went public on September 28, 2017 on the NASDAQ exchange with an IPO of $14, which valued the company at $1.3 billion at the time. Today, that stock ended at $70.98, meaning the company is now valued at $7.53 billion — an increase in value of over 5 times in less than a year.
How has Roku found such massive success, and what does it mean for the streaming industry?
Like with any successful startup, there are many reasons why Roku’s stock has climbed so sharply — the increase in the number of people cutting cable TV is obviously the foundation to all of this. But the main reason for this latest surge in Roku’s stock price over the last few weeks is likely that the company has become much more than merely a manufacturer of streaming devices.
In October 2017, Roku launched the Roku Channel, a free, ad-supported streaming channel available on all of its devices. When the Roku Channel launched, it featured content from studios and publishers like American Classics, FlimRise, Nosey, OVGuide, Popcornflix, Vidmark, and YuYu. The Roku Channel has since added even more content and can now even be accessed over the web without the need for a Roku device.
Many analysts have pointed to the Roku Channel as one of the reasons Roku’s stock has shot up, but others aren’t so convinced. Still, with Amazon set to roll out essentially a carbon copy of the Roku Channel, you’ve got to wonder if perhaps all the ad revenue the Roku Channel is bringing in might be behind their newfound success – especially with all of the competition in the streaming market.
It also can’t be ignored that Roku brings in a huge chunk of its revenue by earning money whenever users sign up for certain streaming services through its platform. And with the footprint of Roku’s platform expanding rapidly beyond set-top boxes and into smart TVs, the company is seeing a big increase in its user base, more streaming hours from its users, and increased ad revenue.
Some analysts even think live news and the World Cup this year likely added to Roku’s profits as well since these were huge draws for new users this year.
Whatever the reason is, one thing is clear: Roku is now one of the companies to contend with for the top of the streaming market.