This week Roku’s CEO Anthony Wood appeared on The Verges weekly Vergecast podcast show. During the show Wood dove into how Roku runs and the future of Roku. One of the most interesting points Wood made was that Roku is not a hardware company but an ad company.
“We don’t really make money… we certainly don’t make enough money to support our engineering organization and our operations and the cost of money to run the Roku service,” he said. “That’s not paid for by the hardware. That’s paid for by our ad and content business.”
This announcement comes a few months after it was announced that last year Roku made more money from ads and subscriptions than hardware for the first time. Roku seems to be following Google’s model of offering services cheaply or for free and making up the revenue by selling ads.
Wood went on to say that Roku plans to build a next-generation TV ad platform, which is an important part of Roku’s business plan.
Roku has already started to roll out interactive ads. These ads allow viewers to click a button to learn more about a product or service being advertised. This is seen as the next step in TV ads because ads will give you an option to buy the product, claim tickets, or take advantage of a coupon as soon as you see it.
Roku is not getting out of the hardware business but is clearly planning on using their devices to get their ads in front of more subscribers. You can clearly see this plan in Roku’s recent efforts to give away their platforms to TV manufacturers to expand the reach of their OS and ads.
Source: The Verge
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