Last week, Roku announced more than $356 million in revenue, a 42 percent increase from the same quarter last year.
While the coronavirus pandemic has created a boom in the streaming industry, Roku’s good fortunes may be short-lived, according to a new report from The Information.
Why is that? The rise of the smart TVs.
Smart TV takeover
Smart TVs, internet-connected television sets with popular streaming service apps built-in, are getting cheaper, which in turn make them more attractive to consumers. For example, the best-selling smart TV on Amazon right now is a 32-inch 720p LED TV by TCL. It has nearly 18,000 reviews. The TV sells for $130. That’s cheap.
According to data from market research firm Parks Associates, 54 percent of U.S. households now own a smart TV. That number eclipses the market share of standalone streaming devices, which stands at 42 percent. The report from The Information highlights a projection from the Consumer Technology Association that estimates that 35 million smart TVs will be purchased this year, compared to only 22 million streaming devices such as the Apple TV and the Amazon Fire TV stick.
That might be a good thing for streaming services like HBOMax and NBC’s Peacock. Both companies have struggled to get their apps on Roku and Amazon devices due to disagreements over revenue share and customer data. For now, Roku and Amazon Fire stick users are stuck with the out-of-date HBO Now app, which doesn’t have all the titles HBO Max does. They also still don’t have access to Peacock.
Roku and Amazon, which also makes the Fire TV Stick and Fire TV Cube, have a stranglehold over the market. The two companies make up about 70 percent of streaming devices sold.
Why streaming devices are better
The increasing dominance of smart TVs is a bad thing for consumers. For some casual streamers, perhaps the ease of having everything in one device is worth any trade-offs. But, standalone devices provide a superior experience, at least when compared to current smart TV offerings.
As my colleague, Alex Perry, previously mentioned, many of the smart TVs just don’t prioritize the user experience when it comes to built-in apps. These TVs are bogged down by cheap hardware in order to keep prices low, which in turn churns out laggy menus and slow loading times for their streaming service apps.
In addition, there are a slew of smart TV models from a multitude of companies: Samsung, Vizio, Toshiba, LG, just to name a few. Certain features, like HDR support for Netflix, are not available for all of them. It can be daunting to check which model of TV is compatible with new versions of streaming apps.
Remember that dirt cheap $130 TCL smart TV I mentioned earlier? If you look through those thousands of reviews on Amazon for the TV, you’ll find quite a few people complaining about how slow the TV streaming interface is.
Most of these TV manufacturers are primarily hardware companies focused on, well, making TV sets. Software, CPU processors, and operating systems are not what they focus on, unlike Roku, Amazon, and Apple. If you’ve ever tried to use even a basic TV menu interface, you know exactly what I’m talking about. Standalone devices will work better and be more up-to-date than smart TVs when it comes to streaming apps.
Another plus of streaming devices: they’re more affordable, too. Roku’s least expensive streaming stick sells for $29. The Amazon Fire TV Stick is $40. If you need to replace one, or a new model comes out, it’s cheaper to buy a new one than to splurge on an entirely new TV set.
Roku isn’t going anywhere for now. But if smart TVs totally take over, it’s consumers who could be hurt most.