Roku at Morgan Stanley Conference: Streaming Strategy Unveiled

On Wednesday, March 5, 2025, Roku Inc. (NASDAQ: ROKU) presented at the Morgan Stanley Technology, Media & Telecom Conference, where CEO Anthony Wood outlined the company’s strategic vision. While Roku reported robust financial growth, challenges remain in transitioning advertising from linear TV to streaming. The conference highlighted Roku’s efforts to monetize its platform and expand its user base.

Key Takeaways

• Roku’s platform revenue increased by 25% year-over-year in Q4.
• The Roku Channel saw an 82% rise in engagement, indicating strong user interest.
• Roku aims to be operating income positive by 2026, focusing on free cash flow per share.
• The company plans to reach 100 million active accounts next year.
• Strategic partnerships with third-party DSPs are enhancing ad demand.

Financial Results

• Q4 platform revenue grew by 25% compared to the previous year.
• For the full year, platform revenue increased by 18%.
• Engagement on The Roku Channel surged by 82% year-over-year.
• Roku’s focus remains on improving free cash flow per share, with an aim for operating income positivity by 2026.

Operational Updates

• Roku is enhancing its home screen to improve user experience and monetization.
• The company is expanding partnerships with third-party platforms for ad demand and supply.
• Efforts are underway to grow the subscription business through better integration and content acquisition.
• Enhancements to Roku Pay are being made to streamline billing processes.

Future Outlook

• Roku is concentrating on increasing platform revenue through strategic initiatives.
• The company plans to systematically add new markets and drive monetization through its platform.
• Active account growth is expected to continue, with a target of 100 million accounts next year.
• Roku is enhancing its ad capabilities, including launching a self-service ad platform for SMBs.

Q&A Highlights

• Roku is shifting its approach to third-party DSPs from competition to partnership, boosting ad demand.
• The company remains indifferent to pricing trends due to its diverse inventory.
• Political ad spending in Q4 added approximately $60 million to Roku’s revenue.
• Roku’s operating system is considered superior to Android for TV-specific functionality.

For more detailed insights, please refer to the full transcript below.

Full transcript - Morgan Stanley Technology, Media & Telecom Conference:

Unidentified speaker, Morgan Stanley: From Roku. Anthony, great to have you here. Thank you for joining.

Anthony Wood, Roku: Thank you. It’s great to be here.

Unidentified speaker, Morgan Stanley: Before we start, a couple of disclosures. So please note important disclosures, including my personal holdings disclosures and Morgan Stanley disclosures, all appears the handout available in the registration area and on the Morgan Stanley public website. So with that, let’s get started. Roku has been and continues to be a leader in the global transition from linear TV to streaming. Anthony, you just delivered your first quarter with more than $1,000,000,000 in platform revenue.

And in The U. S, The Roku Channel reached households with 145,000,000 people. Anthony, where in the industry is the transition today and what most excites you about the opportunity ahead for the company?

Anthony Wood, Roku: Sure. Well, hey, everyone. It’s great to be here. I guess, first, I’ll just say that like, if you think about sort of the opportunity in streaming and Roku specifically, it’s still early days. Most of the world does not stream television.

They still get it over the air satellite. And even in The U. S, big chunks of the industry have not moved to streaming. There’s still $60 plus billion a year in advertising alone spent on linear still spent on linear TV, which is hard to imagine, but that’s what happened. So, it’s a big opportunity.

And Roku is extremely well positioned. We’re at the center of streaming. People start their streaming experience with a Roku experience on a Roku device. We announced last quarter that more than half of The U. S.

Broadband households use a Roku device to watch television. It’s 125 households with 125,000,000 people in them every day start their TV viewing experience with a Roku device, the Roku home screen, the Roku experience. We’re the number one TV operating system in The U. S, both by devices sold television sold, but also by stream total streaming hours. One of our most powerful assets on our televisions is our owned and operated streaming service called we call the Roku Channel.

The Roku Channel is the third most popular streaming service on our platform, way ahead of a lot of big brands that you’re probably think of when you think of streaming services. 5% of all streaming television watched in The United States is on our streaming service on our platform and that’s growing. I mean, the Roku channel grew 82% engagement, grew 82% year over year, last quarter. So, we’re super well positioned. I mean, and then also just the opportunity, the home screen, where those millions of people start their TV viewing experience is a huge asset for us that we’ve never really focused on monetizing that asset.

Like we focused on, of course, it’s iconic and it’s simple and people love it, but we’ve never really focused on, well, how can we make it work for content owners? How can we make it work for advertisers? How can we make it work for our business more? And so, we’re really starting to work on that. So, I I just feel like we’re in a great position at the center of the ecosystem.

We had a great Q4 and our strategy is really working well. That’s great.

Unidentified speaker, Morgan Stanley: So you did report Q4 results a couple of weeks ago. In your view, what were the key accomplishments for the company last year? And maybe what are your investment priorities or priorities in general going forward?

Anthony Wood, Roku: Yes. So we had an outstanding Q4. Platform revenue was up 25% year over year. It was up 18% year over year for the full year. We announced that we just announced that we passed half of broadband households using a Roku.

The Roku channel, like I mentioned, was up 82% year over year. So, very strong quarter for us. We were EBITDA positive last year. So, this year sorry, the year before last year. Last year, we focused on continuing to grow EBITDA becoming more profitable.

We’re continuing to do that. This year, we announced that in 2026, we’ll be operating income positive and expect that to continue to improve. We’re very focused on free cash flow per share. That’s doing well. So what we’re focused on is growing platform this year is growing platform revenue by implementing our strategy.

And our strategy really has three prongs. One is to really lean into our home screen. The fact that, like I said, households with 125,000,000 people every day turn on their TV, they see our home screen, they begin they use that experience to decide what they want to watch. They also engage with that experience. There’s actually a lot of opportunities to put ads in that experience itself.

Like for example, we just added a video ad to our home screen that is used by a whole bunch of different verticals, including car companies, which I’d like to it’s a great way to have massive reach instantly for a video ad. So anyway, so leaning more into our home screen, there’s a lot of things we can do there. We’re also focused on growing demand for ad on our platform. There’s a huge amount of we have a lot of ad inventory, both with third party distribution arrangements, but also from our owned and operated Roku channel, which like I mentioned is up 82% year over year. It’s the number three app on the platform.

This quarter is the number two app on the platform. It creates a lot of inventory. And so how do we grow demand for that inventory is a big focus for us, selling more video ads and because we have a lot of supply. So one of our key ways we do that is really leaning into third party partnerships both for demand and supply side platforms. So, that’s a big focus for us this year, continuing to do that.

And third is just taking more advantage of our key asset, Homeschool, but also growing subscriptions. So, we have a large subscription business, tens of millions of subscriptions that we bill every month. And there’s just lots of waste. It’s still compared to what it should be, the way I think it should be is still pretty small. So a lot of focus on growing our subscription business, both by better integrations in the home screen, but also bringing more content, more subscription content onto the platform, and also just more focus.

So, just for example, like we added a recommendation row to our home screen last year. And so, we recommend content, we recommend subscription content that had a pretty big impact on the number of subscription sign ups as well as increased engagement in subscriptions, which reduces in lower results in lower churn. So that’s the strategy we’re focused on executing on that strategy.

Unidentified speaker, Morgan Stanley: That’s great. Yes, three primary drivers, home screen, streaming services distribution and advertising to third party DSPs. Maybe just to double click into some of these, as you mentioned, home screens evolving. In your view, what other ways are there to innovate and maybe monetize that real estate? Obviously, there’s the sport zones that came up.

On the home screen? On the home screen.

Anthony Wood, Roku: Yes. So I think there’s a lot of opportunity to, like I said, to have the home screen work harder both for our viewers to help them find something to watch for our advertisers, to reach viewers and then for our content partners that want to sign up new subscribers or have people view their content. So, and I would say, again, sort of the context is that, there’s a lot of things that we’ve had to do to build the country’s largest streaming platform. And our home stream was not one of the things we historically focused on. We focused on keeping it simple.

We focused on a great viewer experience. Experience. It’s iconic. Our viewers love it. It’s different than all our competitors, which all tend to look alike.

But we didn’t really focus on how can we use it to drive our business. And so that’s what we’re doing now. So, examples of that, I mentioned before we added just simple examples. We added a recommendation row to the top of the home screen, which we didn’t actually have content recommendations on our home screen before. And that’s driving that’s resulting in lower churns, resulting in more engagements, resulting in more sign ups, it’s resulting in more ad views.

So that’s working. We create experiences in the home screen. So for example, around the Super Bowl, we have well, we have an NFL zone. Generally, you have a sports zone. And then we have sort of subparts of the sports zone, including the NFL zone.

And those are all sponsored. They also drive a lot of viewing hours. Sports especially is so fragmented across the platform. The leagues all chop up the rights and sell different rights to different packages to different services. And so viewers have no idea where to find the games to watch.

So, they can go to the sports zone, it will show them what games they’re playing, they can search for their game, their teams. And those zones are sponsored, so that creates new ad inventory. Other examples we added, we have the Marquee ad unit, which is on our home screen, which used to be just banner ads and used to be just M and E ads. We added video to that. So there’s video on the home screen now.

And we’re selling that increasingly to just consumer packaged goods to all the different verticals. So, auto, for example, likes to buy that, that ad unit. We also expanded the number of verticals that we do even for things like we have themes on our home screen like wallpaper. And the themes used to all just be M and E. Like Disney would have a new TV show.

And so like when they launched Mandalorian, we had a Mandalorian takeover at the home screen. Those are really cool. Everyone loves them. They look nice. They work well.

But to sort of expand the number and types of verticals to have access to that, we started doing that. So for example, when we recently had a carnival cruise home screen takeover, It looked very pretty, but it was much more it was not an endemic. It was cruises, not movies. So that’s another example. So there’s just lots of things using AI, more destinations.

We had the Olympic Zone, for example, which is really popular, works really well for NBC, works well for our viewers. So, building out more destinations, which help viewers find content that can create sponsorship opportunities, advertising opportunities to drive more viewing, but also, actually just create engagement in the UI itself. People spend time engaging with the UI, which creates more opportunities for sponsorships and advertising and influence over viewing behavior before they decide what to watch. Right. So the home screen is a big there’s a lot of opportunity there.

Yes.

Unidentified speaker, Morgan Stanley: That’s helpful. Anthony, how are you thinking about drivers of growth for SSD revenue? Would you expect that to follow the growth of price increases across the streaming industry?

Anthony Wood, Roku: Yes. So, well, SSD stands for streaming service distribution. So, a big part of our business is distributing streaming services. But I also think about more generally just our subscription business. And there’s different ways that business grows.

One is when they our business model for for streaming service distribution is generally is sort of a when they win, we win sort of model. So, in other words, if we sign up subscribers for a service, we get a generally get a percentage of that bill for that service. Or if we drive more engagement, we might have ad inventory inside some of those services. So, if there’s more engagement, then we get more ad inventory. And so, when they raise their bill, because our fees often our payment is often a percentage of their bill, we get we make more money.

So, yes, so they all raise prices or most of them raised prices last year. That’s starting to normalize. So, I think that the effect from the price increases will moderate and will normalize. But we’re still there’s still lots of things we can do to grow our subscription business. So for example, we’re improving Roku Pay, which is our building platform.

We’re adding more content. So there’s obviously two kinds of ways to distribute the service on Roku. There’s the traditional app or there’s something we call premium subscriptions. And the premium subscription is when the service is integrated into the Roku experience as opposed to you have to go into an app. And the app is controlled and operated by the service operator.

The Roku experience is controlled by us and it’s more of a wholesale model where we resell the service and we integrate it throughout the experience. And in that model, it’s often a better viewer experience because it’s sort of integrated throughout their TV experience, it’s not just in the app. And then also for the service company for the streaming service company, we do a lot of the heavy lifting, like we do all the marketing, we sign up those customers. So it generally is a good way for them to add a lot of incremental subscribers. So premium subscriptions is something we’re focused on doing a better job of that, being more effective, more features like bundling and that sort of thing, but also adding more content like so just for example, we recently added Max to premium subscriptions.

We added Crunchyroll. And so we’re continuing to add services to that. So and then just more focused on subscriptions generally like better execution, increasing the size of the team, better integration into the home stream like the recommendation for opening subscriptions. So there’s a lot of things we’re doing to grow our subscription business. It’s a big opportunity for us.

Unidentified speaker, Morgan Stanley: Okay. Roku is partnered with third party DSPs, including the trade desk that’s happened to additional demand. And you’ve said recently, it enables you to serve the entire demand curve at multiple price points. Yes, broadly, how are these integrations going? Have you seen an uptick in fill rates?

Anthony Wood, Roku: Yes. Well, I would say that part of our strategy, which is to grow ad demand by working more closely with third party platforms, including DSPs is working extremely well, like we’re seeing. Our platform revenue in Q4 was up 25% year over year. A lot of that was advertising and some of that was because of incremental demand we’re getting from our more enhanced DSP relationships. So, that strategy is working well.

We integrate with all the DSPs like we’ve had for a while, but what’s changing is the level of working with them and the level of integration like we’re integrating much more deeply. And then also, Roku has its own DSP as well called OneView. And prior to the strategy working more closely with third party DSPs, our strategy was to just focus on our own DSP. And it just turns out there’s a lot more ads flowing through third party DSPs than we’re throwing through our DSP. And so and also that resulted in sort of an antagonistic relationship, third party DSPs viewed us as a competitor.

Like we viewed them as a competitor, they viewed us as a competitor. What’s changed is like we’re like, okay, we’re not competitors anymore. We’re going to treat you like a customer, like a partner. We’re going to assign teams to work with you to grow and to build our businesses together. And that’s the big change and then also deeper technical integration.

So, that is resulting in a lot more incremental demand coming from DSPs. And then, you asked about like different price points. I mean, one of the advantages we have is a wide range of ad products. So, we have unique ad products like Roku City or the Marquee ad on our home screen, the video ad on our home screen, or sponsorships with the Sword Zone, like there’s a long list of unique ad products that you can only get on our platform that reach hundreds of millions of people every day. And so those are like in high demand.

And that’s sort of our version of originals. Like we do have some originals on our service, but we don’t spend a lot of money on originals. And in fact, one of the, I’ll say, secrets of The Roku Channel, it’s not that secret, is that the amount of money we spend on it’s the number three app on the platform, this quarter number two so far. It’s we don’t spend very much on content, but we drive all that engagement by integrating it into our user experience. So anyway, so in terms of ad products, we have those unique products that are built into our experience, they are at high value.

And then we have things like Originals, we have baseball, we have sports deal with baseball. And then we have a lot of direct license content, we have rev share content, and then we have fast channels. And there’s popular fast channels and there’s fast channels that are sort of reruns of Bewitched. And so there’s like a whole range. And so we price accordingly, like some of the products are very high priced, some are less expensive, some are bundled.

If you want to get access to some of our more premier ad units, you have to buy a lot of the middle of the range video ad inventory as well. And then some of it, we put in like and then we have our data and some of it and some ad products use a lot of data, some use a little bit of data. So you see on sort of one end is like ad products that don’t have much data, maybe they’re sold through a DSP on the open market, maybe they’re like in the Bewitched linear channel. Like those are on the lower end of the pricing and then the higher end goes all the way up to premier ad units on our home screen.

Unidentified speaker, Morgan Stanley: Great. And I want to hit on the Roku channel soon, but I guess just to follow-up on that point. Is there an ideal mix of ad inventory you’re selling through third parties versus your own DSP or ads manager versus maybe direct?

Anthony Wood, Roku: I wouldn’t say there’s an ideal mix. I mean, our goal is to like be in every channel where customers can buy ads to maximize the amount of demand on our platform. The way is to so we started out selling direct to marketers, direct to ad agencies through an IO business. We still do that. That’s but that’s how we built our ad business.

Then we started adding a lot more focus on DSPs. That’s a big focus for us right now. But a lot of and DSPs, there’s a whole range of pricing depending on what we just talked about, like what inventory, what data. And then, DSPs, like there’s a big shift to DSPs and they are driving incremental demand, but a lot of times incremental demand is because our sales team is still selling direct to an ad agency or to a marketer, but that because they can that marketer can now run their ads through a DSP to deliver on our platform, they’re buying more ads because that’s their preferred way of doing their advertising. So and then also because we have a better relationship with DSPs, that’s also sourcing demand.

So you know, we just want to sell ads. We want to increase demand of ads. We have a lot of supply, a lot of inventory. And so, we’re looking we’re any option that does that. Also, you’ve mentioned the Ad Manager.

The Ad Manager is something we just launched as a self-service platform where small and medium sized businesses can just log in and upload their video and create targeting criteria. And also like most of the KPIs they want to measure, the KPIs they want to optimize towards and then the ad will run. And that’s I think is doing well and it’s a huge opportunity. Like it’s just the idea that a restaurant could use an AI tool to easily create a high quality video and then target certain ZIP codes, like that’s a big new business that I think doesn’t really exist in TV before that is a I think it’s going to be a large business for us.

Unidentified speaker, Morgan Stanley: Got it. That’s helpful. Okay. We heard yesterday that Dana Walden that Disney said advertising is a key growth driver for him. And we have seen large skilled players enter the AVOD space, Disney, Netflix, Prime Video.

Has this impacted pricing across the industry?

Anthony Wood, Roku: Yes. Well, pricing has come down. But we haven’t been impacted as much as other players, because our pricing was always we’re always fairly not low, low price, but we weren’t super premium priced. It’s the super premium price inventory that’s really come down a lot. So, our pricing actually hasn’t been that impacted that much.

But we’re also kind of indifferent to where pricing goes, because we have a lot of supply. And we just lower price means we’ll sell more ads. And so, I think we’re in a much better position in that regards than, say, a company that doesn’t have as much diverse inventory as we have or doesn’t have as much scaled inventory that we have or doesn’t have as much different types of ad products as we have. The other thing about competition, there are a lot of services that are adding ads. So, there is a lot more competition than when it used to be just sort of us and Hulu selling streaming ads.

But I mean, we are extremely well positioned with our very unique ad units, with the large scale of inventory, with our scale generally, almost half of all streaming on Connected TV goes through our platform. So, we just have a lot of scale, we have a lot of data, a lot of high fidelity signals, a lot of inventory, and we work across the spectrum. So, we’re extremely well positioned. And if you look at advertising business generally, it’s a big business. It’s a large business, dollars 60,000,000,000 still in linear, it hasn’t moved.

There’s going to be multiple winners. I think we are one of the winners and I think we’ll be one of the winning winners as well. Great.

Unidentified speaker, Morgan Stanley: Now, I know it’s early, but how are you what are you expecting in this upcoming upfront in terms of pricing trends? Maybe how are Charlie and the team approaching the upfront this year in

Anthony Wood, Roku: general? Well, I think, this was probably had a great upfront last year. I think upfronts are changing. Like, we’re deemphasizing upfronts. Like, the world is moving more towards DSPs, buying less upfront and just more on the scatter market, more throughout the year on DSPs.

So that’s what we’re optimizing towards. So I just think upfronts are less important than they used to be. But obviously, we still participate in the upfronts.

Unidentified speaker, Morgan Stanley: Got it. Anthony, this is the first cycle in which we saw arguably real political dollars flow to CTV. Around $60,000,000 went to Roku in the fourth quarter. How do you view Roku’s ability to capture future political ad dollars and I guess the inherent benefit CTV has over linear TV?

Anthony Wood, Roku: Yes. Well, I mean, CTV is much more targeted than linear TV. Yes. So, I just think so political so the last cycle we had political ad business. This cycle we decided, look, we’re going to like get good at this.

Like this is a big market political ad. And it’s also similar to other verticals where have similar characteristics where you want to do a lot of targeting. And so we really focused on it, and we did much better than we expected in terms of our sales for political. And we also became better at it and will be even better at it next cycle. It also the same techniques we used for political work for a lot of verticals as well.

So, it’s helping us to become better at targeting specific verticals. So, I mean, internally, I think it was a huge win for us. Like, we were very we really sold a lot more ads to political customers than we thought we would. We improved our ability to do it. We improved our tools.

We improved our processes. We improved our sales techniques and that’s going to apply to a lot of verticals going forward.

Unidentified speaker, Morgan Stanley: Got it. Maybe let’s shift to engagement. You reported four point two hours stream per active account per day in the fourth quarter, set up nicely year over year. How does the Roku operating system drive engagement levels higher? And how does engagement on the Roku platform compare to competitive streaming platforms or other connected TVs?

Anthony Wood, Roku: Well, we have a lot of engagement. We’re the number one streaming platform in The U. S. By a lot of wide margin by engagement as well as sales. Engagement in the Roku channel, like I said, up 82% year over year.

That’s huge. And how do we drive engagement? It’s really that’s I mean, that’s what we do. Like that’s our business at its core is to like build a user interface, a Roku experience that drives more TV viewing and also directs it. Not perfect direction, but like has a lot of influence over what someone’s going to watch, what ads they’re going to see, what they’re going to sign up for.

And that’s what we do day in and day out. Like that’s when we work on the Roku user interface, that’s what we’re doing. We’re creating ways to drive engagement. Everything that I mentioned, like everything from like adding a recommendation row, sports zone, improving the ad units, adding new things like watch to watch, adding things like home and garden zone, adding the food zone, like there’s just we’re I mentioned on the call, we’re in the process of redesigning our home screen. It’s not going to be a huge change, because we don’t want to lose the iconic look and feel, but our home screen is pretty simple.

We can still keep it simple and have it drive a lot more engagement. So, it’s a big focus for us to continue to work on driving engagement.

Unidentified speaker, Morgan Stanley: Got it. And on that point, TRC hours streamed were up 82% in the fourth quarter. In your view, what’s the relationship between engagement growth and revenue growth at the Roku channel typically?

Anthony Wood, Roku: Well, engagement is growing faster than revenue. I mean, revenue is growing nicely, like I said, like last quarter 25% year revenue growth for the platform business. A lot of that was ads. But engagement is growing 82 and that’s because we’re getting like we’re just getting a lot better driving engagement. I mean, our content budget actually is, I think, is down.

So it’s not content. We are probably getting better at the type of content that we pick, but it’s all about placement in the UI for the assets we want people to watch. And we want them to watch The Roku Channel. So and it’s free. People like watching it.

So, for example, I think really telling is when we launched The Roku Channel, 100% of viewing happened because there’s a Roku Channel icon on the home stream and they click on the icon and it goes to The Roku Channel and then they watch something. That was 100% of viewing. Now that’s only 20% of viewing in the Roku channel. 80% of viewing in the Roku channel is somewhere else in the UI, there’s a piece of content promoted, like whether it’s a banner ad or in want to watch or a recommendation or in the support zone or throughout the entire Roku experience for promoting content we want people to watch or not just what we want to watch, but we also think they’ll want to watch. And that’s what’s driving the growth in the Roku channel.

Unidentified speaker, Morgan Stanley: So that’s

Anthony Wood, Roku: 80% of viewing now is not even coming from the tile. Okay. Great.

Unidentified speaker, Morgan Stanley: Switch gears a bit. Globally, it appears that the two leading third party operating systems are Roku as number one share in North America and Android in many international markets. How would you compare the Roku operating system to Android and That’s way better.

Anthony Wood, Roku: A lot better.

Unidentified speaker, Morgan Stanley: Great. Yes. Next question.

Anthony Wood, Roku: Sorry, did you finish the question?

Unidentified speaker, Morgan Stanley: I was just going to say the value proposition between the two, but

Anthony Wood, Roku: Yes. I mean, I think so the big picture of what happens is in the markets we’re in, we’re number one or we’re number two, in some cases, on the way to becoming number one. But if we’re number two, number one is Samsung, because they are the default, because there’s so many Samsung TVs sold. So, in the markets we’re not in, Android is often the leading operating system. And it’s just because they’re the default, like they have a global footprint and they’re the default smart TV OS if we’re not in that market.

And we’re so, we systematically add new markets. So, the markets we’re in today are The Americas, Canada, Latin America, U. S. And then The U. K.

And so, that’s kind of the pattern. And then, so like you look at like Mexico, for example, like Mexico, our market share is at this point is almost more than in The U. S. Like we’re selling a lot of TVs in Mexico and a lot of streaming hours. In The U.

S, it’s about 40% of TV sold are Roku TVs. So, Mexico is pretty close to that. Okay. So, and then why is that? Like, how do we compete with Google?

Well, the fundamental way we compete is, we build an operating system that’s for television just for television. Their product is a phone operating system. They port it to television. And so, it makes perfect sense for them, like they just have one operating system, but it doesn’t result in the optimal experience for a viewer. And it doesn’t result in the optimal cost structure.

Like TV the TV business is extremely cost competitive. And one of the core attributes that we focused on when we designed our operating system for TV was to make sure that this TVs cost less to build by having more efficient software, the less memory, slower processors, just cheaper hardware. And that’s the fun advantage, especially in international markets, which is even more cost sensitive than in The U. S. Like having a lower cost fundamental structure is just key.

And then the other thing we focus on that they know for some reason, I don’t know why, but they don’t really get it right is just being super easy to use, incredibly simple. And they tend to focus I think a lot of our competitors tend to focus on cluttering the UI by with what they perceive as monetization, whereas we focus on, okay, we’re going to have an awesome experience for customers. We’re going to have viewers go into stores asking for Roku TVs, and then we’re going to monetize around that. So, it’s I think just the simplicity, the delight and the lower cost structure, and then the focus, that’s why we win. Got it.

Unidentified speaker, Morgan Stanley: And I wanted to ask, there’s been a more recent trend of some of these large OEMs like LG and Samsung licensing out their operating system to third parties and maybe your view there and if you see that impacting your market share.

Anthony Wood, Roku: We haven’t seen them have much success with that. Our biggest competitors are Google and Amazon. And just the way it breaks out is in The U. S. On players, Amazon is our biggest competitor.

So, we sell there’s three ways we distribute our hardware. We sell Roku TVs made by other companies like TCL and Hisense. We sell first party Roku TVs that are made by us. That’s the newest and the smallest segment. We sold about 1,000,000 Roku TVs Roku first party TVs last year, but that’s growing.

And then on the first part, the third party TVs, that’s about like I said, about 40% of U. S. TVs are sold at are Roku TVs, one from one of our hardware partners. And then streaming players are the other way we distribute our platform. So, I forgot.

So, what

Unidentified speaker, Morgan Stanley: are we talking about? What was the question? Sorry. Just the OEMs licensing out there,

Anthony Wood, Roku: their OS. Yes, the Samsung OS. Yes. So, those are the three ways to do it. No one so, all right.

So in The U. S, it’s us versus Amazon. We split the player market. On the TVs, we’re by far number one. And I think this is like in terms of them licensing their TV offering system, they just have the fundamental issue that I talked about that they don’t have the right cost structure.

So they don’t have the right brand. They don’t have the right experience. And they also just have the fundamentally more expensive because they also didn’t build a ground up TV operating system, they took HTML and they just use HTML. HTML is very expensive, like HTML is designed for PCs with a lot of processing power and a lot of memory and it’s very expensive hardware to run HTML. So just the fundamental lower cost structure, I think is their biggest problem.

And the other big problem they have is it’s just not a great experience. I mean we sell despite the fact that 40% of the TVs sold in U. S. Are Roku TVs, I mean 60% are not Roku TVs and that’s why we sell a lot of streaming players because people buy those TVs, they buy a Samsung TV and they go out and like this UI and they buy a Roku streaming player to put on. Okay.

Unidentified speaker, Morgan Stanley: Anthony, you received a number of questions on recent earnings calls around Walmart’s acquisition of VIZIO. In your view, how do you see that impacting the industry longer term? Would you expect Walmart to prioritize the sale of VIZIO TVs at the retail stores, invested more in the VIZIO LS?

Anthony Wood, Roku: Yes. I think the way I think about that big picture is that I mean, the big, big picture is that well, is that I fully expect our active account growth to continue to grow certainly worldwide and in The U. S. As well. I mean we’re growing faster outside The U.

S. Than inside The U. S. Because The U. S.

Is we already got a lot of scale. But even inside The U. S, I expect our market share to continue to grow. We said that we’re going to get to 100,000,000 active accounts sometime next year, a little bit over a year. We’re about 90,000,000 now.

So and I think also Walmart, I’m sure will shift some of their assortment to the Zio TVs away from Roku TVs. But we’ll still sell a lot of Roku TVs inside Walmart because we have a great brand. People love their Roku TVs. Most Walmart customers own a Roku TV. And when they go and shop for a new TV, they want to buy another Roku TV.

They don’t want to buy a TV that’s different for starters and then probably not as good. So it’s going to be hard for them to so we’re going to sell a lot of Roku TVs inside Walmart. We’ll probably sell less. I’m sure we’ll sell less than we would if they hadn’t done that deal. But the other thing that’s happening is other retailers that used to sell VIZIO are replacing them with Roku TVs.

So we’re expanding our distribution outside Walmart. We’re expanding our distribution in international markets. And the biggest and so I expect that active accounts will continue to grow for a long time. And then the other big focus for us in terms of driving growth is the biggest focus is just driving monetization, platform monetization. There’s a lot of room to grow ARPU on our platforms.

Unidentified speaker, Morgan Stanley: Got it. Okay. That’s a good place to wrap. We’re out of time. Anthony, thank you so much.

Anthony Wood, Roku: Thank you.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.