The monumental presence of Amazon could be detrimental to Roku’s prospects for advancement.
This was confirmed in the latest report by Brian Nowak and Benjamin Swinburne, research analysts from multinational investment bank and financial services company, Morgan Stanley.
In their report released on Monday, they verified the development that Amazon and Roku are now the two leading companies in the “broadly defined streaming-TV market.”
Swinburne, who represents Roku for Morgan Stanley, finds the risk from Amazon and other firms concerning.
In examining the promising rivalry of the retail giant with Roku, Nowak and Swinburne affirmed that the main ingredient to Roku’s business has been advertising.
It has succeeded through selling video advertisements to the main screens of its software platform’s user interface, the Roku Channel, and some of the channels it offers on its application store.
Rokuâ€™s video advertisement venture has brought more revenue to itself than its sale of its gadgets.
The Morgan Stanley researchers described Roku’s advertising-based business as to have succeeded through offering advertisers a large and expanding audience.
In addition, it has convinced its audience to be engaged more with its services. However, Amazon would likely hamper this advertising business growth of Roku.
The e-Commerce giant could grab the market share from its gadgets and software. Amazon could also redirect the attention of Roku users to other video services.
Amazon primarily serves as a threat to Roku because of its distributor of streaming channels. In addition, its advertising ventures have metamorphosed as the fastest-growing segment of its business.
The other factor which would be hazardous to Rokuâ€™s growth is Amazonâ€™s brewing ad-supported channel.
This would be built around its IMDB service which would essentially be the company’s rendition of the Roku Channel.
Swinburne and Nowak stated in their report that the competition that involves Amazon is “real and intensifying.”
Apparently, the successful company built by Jeff Bezos has witnessed substantial gains. It is visibly playing as the dark horse to Roku.
The investors and management of the latter would possibly be alarmed. After all, Amazon is a fierce player.
Its primary retail business had already exhausted the burning fire of its former prominent opponents.