Roku, the popular streaming platform, announced at CES 2023 on Wednesday that it will start producing its own line of smart TVs. Roku currently offers Roku-branded TVs through third-party partners, which include Chinese manufacturers TCL and Hisense. As a result of the transition, Roku will have more control over the production of their TVs. Roku Select and Roku Plus Series TVs will be the company’s first-ever self-built TVs.
The company will offer 11 models with sizes ranging from 24 inches to 75 inches, and prices running from $119 to $999, making them accessible to a wide range of consumers. All of Roku’s new HD TVs will come with the Roku Voice Remote, while the more expensive Plus models will get the higher-end Roku Voice Remote Pro, which supports hands-free voice commands and includes a rechargeable battery. The new TV series will also work with Roku’s growing line of audio products, including its Roku TV Wireless Soundbar and Voice Remote.
A major differentiation for this new line of Roku TVs, is the launch of the firm’s very own Roku OS. The new operating system will make it possible to use streaming apps, such as Netflix, Disney Plus, Hulu, HBO Max, and others, as well as popular voice controls such as Amazon Alexa, Google Assistant, and Apple HomeKit, all at once. “This move can fully realize the full potential of our Roku TV program, by bringing our award… our content, our award-winning operating system, and hardware all together under one roof. So making our own brand of TVs is that natural next step in our company’s evolution,” said Roku’s VP of retail strategy Chris Larson.
One of the main reasons why Roku is making bigger commitments towards its hardware business is that the company has experienced poor ad sales in recent years. Despite the fact that Roku sells hardware such as TVs and streaming devices, the great bulk of its income comes from its platform business, which is based on ad revenues. In the third quarter of 2022, the platform business made up $670 million of Roku’s $761 million in total revenue, while hardware sales only accounted for $91 million. That reliance on variable ad sales, resulted in Roku’s stock prices declining more than 80% over the past year as related revenue dropped. According to entertainment & digital media analyst Michael Morris from Guggenheim, Roku’s decision to make TVs is “a key strategic move to driving market share growth.”
As the competition in the streaming TV industry increases with the introduction of Amazon Fire TV, Google TV, and Samsung TV, Roku also needs to position itself as a strong player in the market. One advantage for Roku is that its smart TV operating system aims to be more up-to-date with new apps and features compared to other platforms. In addition, Roku’s new Roku TV provides access to a wider range of streaming apps and features compared to some of its competitors. For example, Fire TV does not have access to the full Google Play Store and is only compatible with Amazon’s Alexa. Android TV, similar to Android phones, may have a less consistent experience across different brands. Samsung’s TVs offer a closely integrated experience with other Samsung products, but may not be as compatible with third-party devices. Therefore, Roku TV’s third-party friendly Roku OS provides a strong competitive advantage in the market.
Roku’s move into the TV market is sure to shake things up, and represents a major shift after more than 20 years focused on the streaming business. “Our goal is to continue to create an even better TV experience for everyone. These Roku-branded TVs will not only complement the current lineup of partner-branded Roku TV models, but also allow us to enable future smart TV innovations. The streaming revolution has only just begun,” said Mustafa Ozgen, President, Devices, Roku.
