The device that originally connected us to Netflix no longer gets a cut from its subscriptions.
Rut-roh, Roku. The streaming-device manufacturer and gatekeeper, and home to the Roku Channel (aff), is in a spot of trouble.
An April 13 report from the media analysts at MoffettNathanson doesn’t mince words: “Roku: Three Key Things to Worry About.” Since it’s a major technology equity research firm that came to the conclusion, we might suggest the report itself represents a fourth.
First concern: The creation of Warner Bros. Discovery is poised to take a major chunk out of Roku’s bottom line. People signing up for streaming services through Roku make for a very attractive revenue stream (aka “high-margin content distribution revenue growth”). Per Roku’s developer terms, it generally takes a 20 percent share of monthly subscription revenue for users who sign up through its platform.
However, analysts say the combined platform of HBO Max and Discovery+ will give WBD leverage at deal-renewal time, which is particularly problematic when you consider that “HBO Max, given its higher monthly price vs. other DTC services, appears to be [Roku’s] largest driver of subscription revenues.” That last point is kind of amazing considering that for its first six months, HBO Max was not available on Roku as the pair battled over terms on user data and ad inventory.
According to data from market-research company Antenna, 64 percent of all streaming subscriptions come directly through the respective companies’ sites. Another 15 percent sign up through iTunes, with nine percent through Amazon channels. For Roku, it’s a relatively measly five percent. (Amazon Fire TV, Hulu, and Google Play each get 2 percent.)
Sifting through that five percent is more revealing: According to Antenna, it’s comprised of “at best, a midteens [percentage] share of subscribers” for services like Peacock, HBO Max, and Discovery+. Utterly AWOL is Netflix, which…