The outstanding performance of Roku in Q3 2018 is the subject of our discussion this week. We discuss the numbers, the pivot away from hardware sales, the consumer proposition, ad revenue opportunity, and future challenges.
Chapter 1: Roku Q3 2018 results (1:00)
Roku performed very well in the third quarter of 2018. Consumer metrics all showed strong positive gains. Revenue growth was also strong, particularly in the area of advertising. Listen to this section to understand how much people are streaming through Roku, and how much revenue the company is making from devices and video ads.
Chapter 2: The pivot to advertising is going well (6:00)
Over the last year, Roku has switched from being a device maker in a low-margin business to an advertising publisher in a high margin business. Listen to this section to understand how the company did it.
Chapter 3: Roku – the way pay TV is done online? (9:00)
Roku shares many things in common with the pay TV business. However, there are some important differences that make Roku’s business more closely aligned with consumer needs today than traditional pay TV. In this section, we discuss why.
Chapter 4: The ad revenue opportunity (14:00)
The management at Roku has been very disciplined in how they have invested their development dollars. The company has developed an advanced advertising delivery system and, more importantly, performance measurement tools. These tools allow the company to demonstrate the effectiveness of the video ads it delivers. It plans to use these tools to help it increase its part of the $70 billion television advertising market.
Chapter 5: Challenges ahead (17:00)
There are still big challenges ahead for Roku. One of them is in the International expansion of the company. It has limited exposure to foreign markets while competitors are everywhere. I think that Roku still has multiscreen challenges, but Will does not agree.