ROKU - Roku

[Jurgis]

Roku TV built in to TCL televisions is a good product that we use for AirBnB rentals.  It allows us to have a single remote controlling the television and all of the streaming options.  No input selections for Apple TV, regular TV, chrome cast, etc..  Seems these TCL Roku TV's are the best option for outfitting a short term rental.

 

That builds growth in the platform and accounts (I have to have a Roku account to set up the TV).  But apart from whatever portion of the $140 TV purchase goes to Roku, zero money flows to Roku from my TCL Roku TVs.  They don't play ads, nobody watches Roku's own "channel", etc..

 

And, over time, you would expect Android TV or whatever google ends up settling on, to become a fierce competitor.  Building an OS to build into the TV itself was a smart move.  I just think people overestimate Roku's ability to make money off of these "platform" growth figures.

 

What do you mean no one is watching the ads / The Roku Channel? How do you know?

 

I think I have a related question: what do you think your AirBnB renters are watching on that TV? Do you expect that they are logging into their Netflix/Amazon accounts on it (I wouldn't)? What else is there to watch based on your setup?

 

I'm sorry I have Roku, but I only watch my Netflix/Amazon on it. I have no clue what else it has that can be watched without accounts/logins.

[wabuffo]

I wish they sold a large screen dumb TV with a high quality screen.  I'd love a 65" high quality 4K screen as thin as it was possible to make it, with no speakers for sound, no TV tuner, and just 1 HDMI input nothing else.  Just a super thin 65" monitor with one input.  But this may be a reason that such a thing doesn't exist.

 

It does exist (sort of) - if you have a lot of $ to spend!

 

https://www.lg.com/us/tvs/lg-OLED65W8PUA-signature-oled-4k-tv

 

Paper-thin 65-in LG 4K OLED TV that hangs on to a thin, magnetic wall-mount (specs say its less than a quarter-inch thick).  It doesn't have a HDMI input, but rather a combination power cord/input cord that attaches to a speaker/processor unit that you can place on a shelf below the TV.

 

Also comes in a 77-in version for extra $$.

 

wabuffo

[nkp007]

Roku TV built in to TCL televisions is a good product that we use for AirBnB rentals.  It allows us to have a single remote controlling the television and all of the streaming options.  No input selections for Apple TV, regular TV, chrome cast, etc..  Seems these TCL Roku TV's are the best option for outfitting a short term rental.

 

That builds growth in the platform and accounts (I have to have a Roku account to set up the TV).  But apart from whatever portion of the $140 TV purchase goes to Roku, zero money flows to Roku from my TCL Roku TVs.  They don't play ads, nobody watches Roku's own "channel", etc..

 

And, over time, you would expect Android TV or whatever google ends up settling on, to become a fierce competitor.  Building an OS to build into the TV itself was a smart move.  I just think people overestimate Roku's ability to make money off of these "platform" growth figures.

 

What do you mean no one is watching the ads / The Roku Channel? How do you know?

 

I think I have a related question: what do you think your AirBnB renters are watching on that TV? Do you expect that they are logging into their Netflix/Amazon accounts on it (I wouldn't)? What else is there to watch based on your setup?

 

I'm sorry I have Roku, but I only watch my Netflix/Amazon on it. I have no clue what else it has that can be watched without accounts/logins.

 

Not to mention there's revenue share for Roku on some of the ads displayed on subscriber channels / impressions when you hit the Roku home screen.

[gfp]

I guess I don't know in general.  But our guests watch the subscription-based streaming content and live TV that most people watch.  Netflix, Amazon, HBO, Hulu and live Network television.  Achieving the spot of 5th most watched app on Roku isn't a big win when the first 4 are dominating.  It's like saying nobody is watching Crackle.  Because nobody I know actually tunes in to Crackle to see what's on for free.  Someone must watch Crackle just like someone must watch Roku Channel.  But almost all of the time is spent on Netflix, Amazon, HBO and Hulu. 

 

Maybe I'm wrong - maybe Roku Channel and Ads will become a big hit for them.  I remember when Netflix had lame streaming content and you had to get the DVDs mailed to your house if you wanted to see anything good.  They pivoted, but it was expensive

 

Roku TV built in to TCL televisions is a good product that we use for AirBnB rentals.  It allows us to have a single remote controlling the television and all of the streaming options.  No input selections for Apple TV, regular TV, chrome cast, etc..  Seems these TCL Roku TV's are the best option for outfitting a short term rental.

 

That builds growth in the platform and accounts (I have to have a Roku account to set up the TV).  But apart from whatever portion of the $140 TV purchase goes to Roku, zero money flows to Roku from my TCL Roku TVs.  They don't play ads, nobody watches Roku's own "channel", etc..

 

And, over time, you would expect Android TV or whatever google ends up settling on, to become a fierce competitor.  Building an OS to build into the TV itself was a smart move.  I just think people overestimate Roku's ability to make money off of these "platform" growth figures.

 

What do you mean no one is watching the ads / The Roku Channel? How do you know?

[Jurgis]

OT.

 

I remember when Netflix had lame streaming content and you had to get the DVDs mailed to your house if you wanted to see anything good.

 

Sorry to say, but they still do have lame streaming content. And I still get DVDs mailed to my house for good movies.

 

To make this quantifiable: how many last year Oscar nominees are streamed on Netflix? https://oscar.go.com/nominees

 

[gfp]

 

I think I have a related question: what do you think your AirBnB renters are watching on that TV? Do you expect that they are logging into their Netflix/Amazon accounts on it (I wouldn't)? What else is there to watch based on your setup?

 

I'm sorry I have Roku, but I only watch my Netflix/Amazon on it. I have no clue what else it has that can be watched without accounts/logins.

 

We have accounts that allow multiple simultaneous streaming locations - I forget how many but enough that it doesn't cause a problem with the teenager, us at home, and a few AirBnB renters simultaneously.  I think even my Mother uses the account.  It's a couple bucks a month extra.

 

Short answer - we keep the roku logged in and people watch the streaming services under the "Guest" name.  There is a way to do it with Amazon on Roku that keeps them from being able to buy stuff.  Not registering your roku to amazon or something like that.

 

Almost all our guests use Netflix exclusively- for whatever reason- but some people watch live sports on the networks (you can tell because they change the channel from my default nbc).  Haven't seen many people use Amazon or HBO Go, which I thought would be more popular

[Jurgis]

 

I think I have a related question: what do you think your AirBnB renters are watching on that TV? Do you expect that they are logging into their Netflix/Amazon accounts on it (I wouldn't)? What else is there to watch based on your setup?

 

I'm sorry I have Roku, but I only watch my Netflix/Amazon on it. I have no clue what else it has that can be watched without accounts/logins.

 

We have accounts that allow multiple simultaneous streaming locations - I forget how many but enough that it doesn't cause a problem with the teenager, us at home, and a few AirBnB renters simultaneously.  I think even my Mother uses the account.  It's a couple bucks a month extra.

 

Short answer - we keep the roku logged in and people watch the streaming services under the "Guest" name.  There is a way to do it with Amazon on Roku that keeps them from being able to buy stuff.  Not registering your roku to amazon or something like that.

 

Almost all our guests use Netflix exclusively- for whatever reason- but some people watch live sports on the networks (you can tell because they change the channel from my default nbc).  Haven't seen many people use Amazon or HBO Go, which I thought would be more popular

 

OK, got it. Thanks. This makes sense. IMO good setup for your guests. Maybe I should friend your properties on AirBnB.  8) (J/K the last ;))

[gfp]

So I was curious and went onto the Roku Channel website.  I watched live ABC news for a while (Barr confirmation) and there wasn't a single ad shown to me.  Not even before the content started streaming.  So next I selected a movie to stream from the Roku Channel ("Cake") and it played without any advertisement.  Do the ads only get served to the television? 

 

Does a service like Netflix or Amazon allow Roku to insert ads into their content?  That would surprise me.  Perhaps it is primarily the "Top Free stuff" sponsored by "xxxxxx" that brings in advertising dollars?  I'm trying to figure out how they are going to make $17 off of me this year and how much they are paying for the content.  Are they getting content largely for free and splitting ad revenue with the content owner?

[Jurgis]

Does a service like Netflix or Amazon allow Roku to insert ads into their content?

 

I don't think so. I haven't seen any ads on Netflix (apart from Netflix'es own banners/shows/movies in UI) and Amazon only has its own ads at the beginning of movie/show.

 

It might be that Roku gets some money from Netflix/Amazon for the UI for their channel, but IDK.

Overall, is the channel UI done by Roku? By Netflix/Amazon/every-channel-owner? It does seem that some of the UIs are flakey. Possibly with memory leaks. Have to reboot Roku box periodically. This might not be an issue on TV which gets turned off all the time lol.

[chrispy]

Over the past few months we have transitioned to YouTube tv and Netflix. We had to get a Roku after battling Amazon stick slowness and the difficulty in guests/wife using chromecast. I have been very impressed by Roku.

 

They do not show their own ads once an app is launched.

[gfp]

One thing I think Roku has done really well is their remote.  The Apple TV might be an OK device, but for most people that remote is what turns them away from actually using it in any cable-replacement type of capacity.  Just try to fast-forward through a commercial or change the volume from it.  Chromecast has no remote.  I haven't used Amazon's Fire remote.

 

It's surprising to me, with all the surveys they put out there, that YouTube TV / Google haven't decided to launch a remote control product.  It's what is missing from their strategy. 

[rkbabang]

One thing I think Roku has done really well is their remote.  The Apple TV might be an OK device, but for most people that remote is what turns them away from actually using it in any cable-replacement type of capacity.  Just try to fast-forward through a commercial or change the volume from it.  Chromecast has no remote.  I haven't used Amazon's Fire remote.

 

It's surprising to me, with all the surveys they put out there, that YouTube TV / Google haven't decided to launch a remote control product.  It's what is missing from their strategy. 

 

The Apple remote takes some getting used to, but after using it for about 6 months I really like like it now.  Where-as the Roku remote takes about 6 seconds to get the hang of.  I think the AppleTV is a slightly better product than the Roku ultra even if the Roku remote is better than the Apple one.  I would never had gotten rid of my Roku Ultra in the first place if I didn't have audio problems with it.  I was getting dropouts and pops in the audio while watching. The pops where really loud and sounded like something that could damage your speakers.  I'd get frustrated and shut off my receiver, because the problem never happened when the sound was coming from the TV speakers.  It never happens at all with the Apple TV.

 

[boilermaker75]

Roku TV built in to TCL televisions is a good product that we use for AirBnB rentals.  It allows us to have a single remote controlling the television and all of the streaming options.  No input selections for Apple TV, regular TV, chrome cast, etc..  Seems these TCL Roku TV's are the best option for outfitting a short term rental.

 

That builds growth in the platform and accounts (I have to have a Roku account to set up the TV).  But apart from whatever portion of the $140 TV purchase goes to Roku, zero money flows to Roku from my TCL Roku TVs.  They don't play ads, nobody watches Roku's own "channel", etc..

 

And, over time, you would expect Android TV or whatever google ends up settling on, to become a fierce competitor.  Building an OS to build into the TV itself was a smart move.  I just think people overestimate Roku's ability to make money off of these "platform" growth figures.

 

My wife gave me a Roku TV for Xmas for my exercise room. I love it so far.

[gfp]

Off topic, but I get the exact same loud pops you are describing from my similar Denon receiver when my DirecTV is on "pause" - but only on "pause."  I wonder if it has something to do with how the Denon works.  I didn't have the pause sounds when I had an Onkyo, but then some smoke came out the top of the Onkyo receiver so we replaced it with the Denon and the "pause pops" began.

 

*edit: some googling of 'Denon receiver loud pops' indicates I should look into changing some audio setting to "PCM" - worth a try

*next edit: what actually fixed the issue was changing the audio setting of the DirecTV receiver to "Dolby Digital On".  Maybe unrelated to your issue but you could try setting the Roku audio output to Dolby Digital if available..

 

One thing I think Roku has done really well is their remote.  The Apple TV might be an OK device, but for most people that remote is what turns them away from actually using it in any cable-replacement type of capacity.  Just try to fast-forward through a commercial or change the volume from it.  Chromecast has no remote.  I haven't used Amazon's Fire remote.

 

It's surprising to me, with all the surveys they put out there, that YouTube TV / Google haven't decided to launch a remote control product.  It's what is missing from their strategy. 

 

The Apple remote takes some getting used to, but after using it for about 6 months I really like like it now.  Where-as the Roku remote takes about 6 seconds to get the hang of.  I think the AppleTV is a slightly better product than the Roku ultra even if the Roku remote is better than the Apple one.  I would never had gotten rid of my Roku Ultra in the first place if I didn't have audio problems with it.  I was getting dropouts and pops in the audio while watching. The pops where really loud and sounded like something that could damage your speakers.  I'd get frustrated and shut off my receiver, because the problem never happened when the sound was coming from the TV speakers.  It never happens at all with the Apple TV.

[rkbabang]

Off topic, but I get the exact same loud pops you are describing from my similar Denon receiver when my DirecTV is on "pause" - but only on "pause."  I wonder if it has something to do with how the Denon works.  I didn't have the pause sounds when I had an Onkyo, but then some smoke came out the top of the Onkyo receiver so we replaced it with the Denon and the "pause pops" began.

 

*edit: some googling of 'Denon receiver loud pops' indicates I should look into changing some audio setting to "PCM" - worth a try

*next edit: what actually fixed the issue was changing the audio setting of the DirecTV receiver to "Dolby Digital On".  Maybe unrelated to your issue but you could try setting the Roku audio output to Dolby Digital if available..

 

One thing I think Roku has done really well is their remote.  The Apple TV might be an OK device, but for most people that remote is what turns them away from actually using it in any cable-replacement type of capacity.  Just try to fast-forward through a commercial or change the volume from it.  Chromecast has no remote.  I haven't used Amazon's Fire remote.

 

It's surprising to me, with all the surveys they put out there, that YouTube TV / Google haven't decided to launch a remote control product.  It's what is missing from their strategy. 

 

The Apple remote takes some getting used to, but after using it for about 6 months I really like like it now.  Where-as the Roku remote takes about 6 seconds to get the hang of.  I think the AppleTV is a slightly better product than the Roku ultra even if the Roku remote is better than the Apple one.  I would never had gotten rid of my Roku Ultra in the first place if I didn't have audio problems with it.  I was getting dropouts and pops in the audio while watching. The pops where really loud and sounded like something that could damage your speakers.  I'd get frustrated and shut off my receiver, because the problem never happened when the sound was coming from the TV speakers.  It never happens at all with the Apple TV.

 

Thanks, but too late, I got rid of my Roku Ultra box last summer.  I still have TCL Roku TVs in the bedrooms though.  I googled like crazy trying to find a solution and nothing I found worked. It wasn't just the pops though, sometimes the sound would drop out for 10-30 seconds.  Just no sound.  I'd power everything down (TV, Receiver, unplug Roku) then it would come back working and happen again 10-20 min later.

 

EDIT:  Here's a guy who has the same problem with a Marantz receiver.

https://forums.roku.com/viewtopic.php?t=116513

[valueinvestor]

If you want a value investment - this is not for you.

 

After three years of ownership, I'm at a crosspoint on whether to sell this thing or not.

 

At $12B, Roku values each of its users at $375 each and that's with a 50% decline of it's high.

 

At the moment, they are currently doing $25 ARPU with revenues of $1.1B with expected revenues to be at $1.3B for 2020.

 

The only reason why I have not sold is that this is like Tesla without the key man risk. As long as it grows 50%+ a year, and raise capital by issuing it's clearly overvalued stock - it will increase the intrinsic value over time where Wall Street will heavily reward it.

 

Do I think they have a great product with a durable competitive advantage? Yes. It helps to be a neutral brand third party for advertisers such as Netflix that competes with Apple (AppleTV) and Amazon (FireTV). It also helps that it's pureplay, as opposed to part of a huge tech company on valuation and corporate culture standpoint.

 

If I had to put a fair value - it would be $3B - however it was a small 5% position to begin with that ballooned into 20% of my portfolio. Edit: Also a reason why I hesitate to sell anything after a rally because I would have missed out on large gains.

 

However, it is also not unfathomable that revenues will grow at a 40% clip annually which will again make this a bargain. Since you will have a stake in a dominant streaming box company, which would most likely be the new "cable" box of the streaming world.

 

Does anyone have any input?

[aglittell]

What're your thoughts at $22bln?

 

Roku offers a great product that solves a growing issue. Consumers continue to increase their number of streaming service subscriptions, and Roku offers the platform that connects them w/ ease and in a cost efficient manner. Demand for the product should continue to grow while a consumer's alternative is to use a less intuitive and more expensive smart TV or browse the streaming services on their computer and then connect to a TV. With growing demand and a lack of solid alternatives, I expect Roku to continue to see impressive user growth.

 

Roku makes very little profit from selling the players - they need to drive monetization of the growing user base. Advertising on the platform is the key area for monetization. Ads appear on ad supported channels; I have used Roku TVs many times and have yet to see an ad. Maybe because I only use it for Netflix and HBO. The level of future monetization depends on the effectiveness of the ads, in a world where effectiveness can very easily be quantified. Compare the level of targeting that Roku can offer to a FB/Insta ad.

 

Roku's 40mm and growing user base is undoubtedly very valuable but I am skeptical of how effective ads on ROKU can be. Is the degree of effectiveness from a targeting perspective that dissimilar from a normal TV channel? Consensus estimates for Roku's FY22 user base and ARPU are 73mm and $34 (currently 43mm and $23), resulting in revenue of $2.8bln w/ $203mm in EBITDA. So at today's valuation, we're paying 6.6x EV/Sales and 93.5x EV/EBITDA for consensus FY22 estimates.

 

I began research on ROKU after being impressed w/ the product. After a very in-depth 20 minutes of research on Roku I'm inclined to buy FB. I have a much higher degree of confidence in the value proposition of FB ads compared to Roku's. Consensus estimates for FB DAUs and ARPU for FY22 are 2.0bln (with a B) and $40*. We're paying 12.7x Consensus FY22 EBITDA for an advertising platform that is unmatched in size and targeting effectiveness (insert comment about data privacy here).

 

*20 minutes of research limits me to consensus estimates, sorry. They're both well covered by the street.

 

 

[aglittell]

Microsoft announced that the new Xbox will aggregate entertainment apps. There will be a block on the UI that showcases content across apps. Here are some of the apps that will be included:

 

Netflix

Disney+

HBO Max

Spotify

YouTube

YouTube TV

Amazon Prime Video

Hulu

NBC Peacock

Vudu

FandangoNow

Twitch

Sky Go

Now TV

Sky Ticket

 

Pretty similar offering to Roku although at a much higher price point for the hardware. I think Roku will end up having more competition than the market is pricing in.

 

[Jurgis]

You could watch a bunch of these on current Xbox. Not sure about new Xbox, but current Xbox UI is crappy as heck for non-gaming. I use it only as a last resort for anything. Though TBH Roku UI is not great either (and depends on app/channel - some apps/channels are way worse than others). I don't think I've seen a video/entertainment UI that is above B-...  ::)

[Castanza]

Apple TV coming to Xbox and PlayStation

 

https://www.theverge.com/2020/11/2/21545980/apple-tv-xbox-app-november-10th-release-date-features

[Spekulatius]

You could watch a bunch of these on current Xbox. Not sure about new Xbox, but current Xbox UI is crappy as heck for non-gaming. I use it only as a last resort for anything. Though TBH Roku UI is not great either (and depends on app/channel - some apps/channels are way worse than others). I don't think I've seen a video/entertainment UI that is above B-...  ::)

 

I use our PS4 for steaming - I like the UI for Netflix. I have the PS4 connected to my receiver and stereophile speakers and a subwoofer and the sound is awesome.

 

My wife “complimented” me just last night when I watched “Black 47” that she though someone fired a shot in our house.

 

That was when the protagonist fired a musket.

 

The scene towards the end in Rambo 2008 when he turns the .5 “ machine gun on those hapless Burmese army guys sounds pretty good too.

 

None of the above has anything remotely to do with Roku or investing I am sorry.

[Broeb22]

You could watch a bunch of these on current Xbox. Not sure about new Xbox, but current Xbox UI is crappy as heck for non-gaming. I use it only as a last resort for anything. Though TBH Roku UI is not great either (and depends on app/channel - some apps/channels are way worse than others). I don't think I've seen a video/entertainment UI that is above B-...  ::)

 

I use our PS4 for steaming - I like the UI for Netflix. I have the PS4 connected to my receiver and stereophile speakers and a subwoofer and the sound is awesome.

 

My wife “complimented” me just last night when I watched “Black 47” that she though someone fired a shot in our house.

 

That was when the protagonist fired a musket.

 

The scene towards the end in Rambo 2008 when he turns the .5 “ machine gun on those hapless Burmese army guys sounds pretty good too.

 

None of the above has anything remotely to do with Roku or investing I am sorry.

 

For some reason, my non-sequitur brain loved this.

[Jurgis]

You could watch a bunch of these on current Xbox. Not sure about new Xbox, but current Xbox UI is crappy as heck for non-gaming. I use it only as a last resort for anything. Though TBH Roku UI is not great either (and depends on app/channel - some apps/channels are way worse than others). I don't think I've seen a video/entertainment UI that is above B-...  ::)

 

I use our PS4 for steaming - I like the UI for Netflix. I have the PS4 connected to my receiver and stereophile speakers and a subwoofer and the sound is awesome.

 

My wife “complimented” me just last night when I watched “Black 47” that she though someone fired a shot in our house.

 

That was when the protagonist fired a musket.

 

The scene towards the end in Rambo 2008 when he turns the .5 “ machine gun on those hapless Burmese army guys sounds pretty good too.

 

None of the above has anything remotely to do with Roku or investing I am sorry.

 

Well, my everything is connected to receiver and 7+1 speakers: Roku, Xbox, BluRay player, computer. So 7+1 surround is there independent of the source HW. Assuming source content provides it.

 

I should periodically rerun the receiver surround auto adjust, but I haven't since we bought it. So likely some of the speakers got bumped and sounds are no longer perfectly balanced.

[RadMan24]

The only advantage Xbox and PS have over Roku and others is that they can transfer higher quality audio.

 

Otherwise, why run your gaming system and risk burning it out for streaming services?

 

Maybe I'm just scared from the PS3 days...

[Jurgis]

The only advantage Xbox and PS have over Roku and others is that they can transfer higher quality audio.

 

Are you sure about this? Links?