Alejandro Arrieche
Roku has inked a deal with Warner Bros and Discovery to incorporate more than 2,000 hours of on-demand content to its library along with multiple popular series and movies like “The Bachelor” and “Westworld”, the firm announced today.
“Hundreds of TV series and movies from Warner Bros. Discovery’s esteemed brand portfolio, including HBO, HBO Max, Discovery Channel, HGTV, Food Network, TLC, Warner Bros. Pictures, Warner Bros. Television, and more, will now be available for audiences to stream for free on The Roku Channel”, stated the official press release published by the streaming company.
These new channels will be added to The Roku Channel grid in the spring season and will enrich the platform’s library of free ad-supported linear streaming TV alternatives (FAST) and ad-supported video on demand (AVOD) selection.
Rob Holmes, Roku’s VP of programming, commented: “We’re delighted to be one of Warner Bros. Discovery’s inaugural FAST partners, and we look forward to introducing its incredible TV series, films, and entertainment brands to a whole new audience on The Roku Channel”.
Earlier this year, Roku launched two new TVs – the Roku Select and the Plus Series TVs. These new models will be available in the spring season as well and will cost between $119 and $999 depending on the size of the device.
Roku Faces a Steep Hill to Become a Leading Force in the Video Streaming Space
Competition in the streaming space has been fierce amid the launch of multiple streaming services from big corporations such as Amazon (AMZN), Apple (AAPL), and Disney (DIS). However, none of those companies have come even close to disputing the leadership of the long-standing king of the land, Netflix (NFLX).
Roku claims to be “America’s leading TV streaming channel by hours streamed with the Roku channel sitting at the top of the FAST and AVOD segments of the streaming business. Meanwhile, the firm’s operating system – Roku OS – is reportedly the #1 smart TV OS sold within the United States as of the third quarter of 2023.
Meanwhile, the firm stood as the leading force in the connected TV devices market with a 50% market share in North America as of the first quarter of 2022.
However, its manufacturing costs have skyrocketed lately, first amid the supply chain crisis of 2020-2021 and then due to the impact of inflation in various corners of the world. So, even though the firm’s devices are market leaders, the financial fruitfulness of this business is null.
Investors Shun Roku Stock as the Company Lacks a Clear Path to Profitability
During the third quarter of 2022, player revenues – which include the sale of Roku TVs and adapters – landed at $269.01 million while the cost of producing these devices ended at $323.54 million, resulting in gross losses of $54 million.
In this same period, the company saw its number of active accounts grow by 16% compared to the same period a year ago to 65.4. This also implied a 3.6% jump compared to the previous quarter.
Meanwhile, the firm’s revenues during that period increased by 12%, primarily led by a 15% jump in subscription revenues. However, Roku’s losses have kept widening, as it reported negative operating results of $147 million compared to an operating profit of $68.8 million it reported the previous year.
With no clear path to profitability, companies in the tech space like Roku, whose fundamentals are considered relatively weak, have suffered the most during this latest market downturn.
Roku (ROKU) has seen its stock value drop by nearly 90% from its mid-2021 all-time highs of $490 per share due to these headwinds and amid an overall deterioration of the macroeconomic backdrop.
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This article was written for Business 2 Community by Alejandro Arrieche.
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