Roku makes no money from YouTube or Netflix, but still plans to go public
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- September 3rd, 2017
Roku is in a bit of a tough position, though this hasn’t been the first time. They’ll have to convince investors that ROku is the future.
Roku wants to go public. The streaming device company filed for an initial public offering on Friday, September 1. But it may have a little bit of trouble convincing investors to take part, since Roku does not make any money from either Netflix or YouTube.
Roku is planning on selling nearly $100 million in common stock. In the IPO filing, the company said that as of June 30, it has 15.1 million active accounts, and users have streamed more than 6.7 billion hours worth of content on the platform from January to the end of June. This marks a 62 percent growth from the same period in 2016. Last year the company generated $398.6 million in revenue, a 25 percent increase from 2015.
All of this may sound appealing to investors. In the first six months of 2017, Roku lowered its prices and even saw a 37 percent increase in device sales. But then comes the hurdle that is Netflix and YouTube. Netflix is the most popular video service on the device, but makes the company little to no money at all.
“We do not expect revenue from Netflix to be material to our operating results for the foreseeable future,” Roku said, according to the Marshfield News-Herald.
And it’s the same story for YouTube. The video sharing service are Roku’s most popular ad-supported service, yet it brings in zero profit. It doesn’t get a cut of YouTube’s ads, which would certainly help in this case. And the device has some pretty serious competition when it comes to other consumer device companies, despite how well the company may be doing.
“Competition is intense for these resources, and a competitor with more extensive product lines and stronger brand identity, such as Apple or Google, possesses greater bargaining power with retailers,” Roku said in the filing. The company is apparently fighting for shelf space at various retailers.
Amazon, for example, is able to sell its own TV streaming products as well as market and promote those products more prominently on its official website. Regardless of all that, it will be interesting to see if and how Roku will bring in investors. About 80 percent of millennials say they watch or have access to streaming services, so that’s good news for the company.
You can check out our review of Roku Express here.