The number of Roku users grew strongly in 2016. Many are now using the company’s devices as their primary TV device. Comcast has noticed this trend and is trialing Xfinity TV on the Roku. Could this lead to a more strategic relationship between the two companies?
On Tuesday, Roku released a summary of its performance in 2016. Aside from the strong growth in revenue, the company also announced a big increase in users, and in the amount they are watching through the devices.
Roku users are watching for longer
Roku says people are using their devices more than they used to:
- In December 2016, active users streamed 1 billion hours of video and music
- For the whole of 2016, active users streamed 9 billion hours of media.
For December, that means the average active user streamed 2 hours and 24 minutes of audio and video through their device. For the full year, the average active user streamed roughly an hour and three-quarters per day.
In Nielsen’s Q2 2016 Comparable Metrics report it states that the average connected TV user watched for 1 hour and 12 minutes per day. Separately, in the Q3 2016 Total Audience Report Nielsen says users of multimedia devices (which would include Roku) watched 2 hours and 31 minutes a day.
Roku is growing faster than the connected TV market
Roku reported it had over 10 million monthly active accounts in June 2016, and it grew this number 36% in the second half of 2016. The company claims an overall 46% growth rate in accounts year-over-year.
Nielsen data suggests Roku’s growth rate is considerably higher than the overall connected TV market. There were 97.7M people that watched at least 1 minute of video on a connected television between March 30 and June 28 2015. This gave connected TV a population reach of 40.7%. The number of connected TV users grew to 104.2M in the same period in 2016, a reach of 42.9%. Overall, the number of connected TV users grew 6.6% in that period.
This data illustrates that there is a large group of people comfortable watching all their television on a Roku. And it looks like pay TV operators are starting to notice.
Comcast putting Xfinity on Roku
Comcast just gave Roku a strong endorsement as it has started beta testing its Xfinity TV app on Roku-powered devices. The Xfinity TV app gives Comcast’s customers access to their full subscription without the need of an X1 set-top box. Comcast could save a lot of money by doing this. Many operators are looking to shed the capital and operational costs involved with providing a set-top box. They need to do this to become more competitive with online video services, and to restore flagging pay TV profit margins.
This is a situation Roku is familiar with. In 2012, satellite broadcaster Sky in the UK launched an online TV service called Now TV. It collaborated with Roku to deliver a streaming media adapter including Now TV for just £9.99 ($12) in 2013. In a recognition of the strategic importance of Roku, Sky participated in two rounds of financing of the company.
Roku looking to grow through private funding
Roku is looking to lean into this strong growth phase. The company is reported to be in talks to receive a private round of investment worth $200M or more. If this turns out to be true, Comcast could be one of the investors. And if the Xfinity trials on Roku are a success, look for Comcast to take the same route as Sky and ship its own version of a Roku set-top box.
Why it matters
Roku is proving that a large and growing section of the population is comfortable watching all its television on a streaming media player.
Comcast has noticed the trend and is trialing delivery of its Xfinity TV service on Roku.
This could lead to Comcast shipping selling its own version of Roku, including Xfinity TV, to its customers. It could also make a strategic investment in Roku.