LOS GATOS, Calif. – 3Q2019 showed promising growth rates for Roku, thanks to masterful advertising deals and subscriber base expansion. Factoring in only ads and subscriptions, Roku’s revenue went up to $112.2 million, which was a 59% increase from the revenue of the past year. In contrast, the revenue generated by Roku player sales amounted to only $6.2 million.
This puts the 3Q earnings from each of Roku’s 32.3 million users at around $22.58. This sums up to annual revenue of $90.32.
According to Roku’s CEO Anthony Wood, Roku’s revenue never hinged on hardware sales – at least, not enough to finance operations, engineering, and upkeep of Roku’s service. In a statement made in 3Q of last year, Wood said that the entirety of Roku has always been paid for by ads and subscription revenues.
In this regard, Roku appears to be taking the path that Google took, selling their hardware at low prices and offering free services, in order to garner advertiser and subscriber patronage.
Roku had said on its 3Q2019 Earnings Call that both ad-supported viewing and subscription viewing was on the rise, with the former outstripping the latter by a fair margin. Overall, Roku’s revenue in terms of ads and subscriptions seems to be taking a consistent upward trajectory.
As one of the primary providers of TV and streaming ads, Roku would appear to be closing in on the ad-supported service market, including such names as Pluto TV and STIRR. Roku’s low-cost barrier for their hardware is the factor most attributed to their rapid user base growth, with Roku players selling for as cheap as $30 and Roku smart TVs representing 33% of all smart TVs in the US.
Analysts agree that this focus on ads and subscriptions, instead of the up-front payment model of most other streaming players, has elevated Roku to the level of revenue it enjoys at present.