You are the product if you use a Roku streamer, says company CEO
In an interview, the Roku CEO admits that the streaming device firm is in the "ad and content" business, rather than the hardware one.
Roku made $61.5 million from its streaming video devices this past financial quarter -- but then also $75.1 million from advertising and licensing. CEO Anthony Wood now says that the company is not focusing on hardware, it is aiming to monetize its users.
"We don't really make money [from the hardware] we certainly don't make enough money to support our engineering organization and our operations and the cost 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."
While Amazon does not release sales figures for its Fire TVs, it's believed that Roku hardware is the biggest-selling of all streaming video devices. Last year AppleInsider reported that Roku had 37 percent of the US market compared to Apple TV's 15 percent.
On top of its devices like the $70 Streaming Stick, the company claims that one in four TV sets sold in the US last year come with Roku hardware. The main screen all users see presents Roku's TV offerings but also adverts. "We help content distributors promote their content, and we get paid for that," said Wood.
Roku is just now taking that further, and applying it to you even though you're paying for the devices either directly to the company or via how much your TV set costs. And, this is in addition to advertisements that you may get from Amazon or Netflix.
While it is explicitly now focusing on using audiences to increases advertising revenue, Roku is still developing new hardware. Speaking about the its recently announced speakers, Wood explained why the company is making them. "We're trying to make Roku TV the best TV it can be. And that will will cause us to be able to sell more ads, frankly, in the long run."
The Verge which interviewed CEO Anthony Wood for its podcast, reports that the company is also aiming to ultimately develop its current Roku Channel into the main way people interact with the service.
Apple has tried a similar user management move, if not an extra advertisement maneuver, with its TV app on both Apple TV and iOS. However, as well as the technology to aggregate multiple TV providers into one app there are issues of permissions from content providers. While Netflix is available on Apple TV, that company has not yet agreed to allow its service to be included in the TV app.
Like Apple TV, Roku TV's service includes apps and some of those will also show you adverts. However, it can be Roku's own team that is selling that advertising space. Which means that the company is selling you. Back in 2014 when speaking about free services, Apple's Tim Cook made the observation that "when an online service is free, you're not the customer. You're the product." The concept applies to Roku's model as well.
Roku made $61.5 million from its streaming video devices this past financial quarter -- but then also $75.1 million from advertising and licensing. CEO Anthony Wood now says that the company is not focusing on hardware, it is aiming to monetize its users.
"We don't really make money [from the hardware] we certainly don't make enough money to support our engineering organization and our operations and the cost 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."
While Amazon does not release sales figures for its Fire TVs, it's believed that Roku hardware is the biggest-selling of all streaming video devices. Last year AppleInsider reported that Roku had 37 percent of the US market compared to Apple TV's 15 percent.
On top of its devices like the $70 Streaming Stick, the company claims that one in four TV sets sold in the US last year come with Roku hardware. The main screen all users see presents Roku's TV offerings but also adverts. "We help content distributors promote their content, and we get paid for that," said Wood.
Roku is just now taking that further, and applying it to you even though you're paying for the devices either directly to the company or via how much your TV set costs. And, this is in addition to advertisements that you may get from Amazon or Netflix.
While it is explicitly now focusing on using audiences to increases advertising revenue, Roku is still developing new hardware. Speaking about the its recently announced speakers, Wood explained why the company is making them. "We're trying to make Roku TV the best TV it can be. And that will will cause us to be able to sell more ads, frankly, in the long run."
The Verge which interviewed CEO Anthony Wood for its podcast, reports that the company is also aiming to ultimately develop its current Roku Channel into the main way people interact with the service.
Apple has tried a similar user management move, if not an extra advertisement maneuver, with its TV app on both Apple TV and iOS. However, as well as the technology to aggregate multiple TV providers into one app there are issues of permissions from content providers. While Netflix is available on Apple TV, that company has not yet agreed to allow its service to be included in the TV app.
Like Apple TV, Roku TV's service includes apps and some of those will also show you adverts. However, it can be Roku's own team that is selling that advertising space. Which means that the company is selling you. Back in 2014 when speaking about free services, Apple's Tim Cook made the observation that "when an online service is free, you're not the customer. You're the product." The concept applies to Roku's model as well.
Comments
Roku gets good reviews, and I’ve heard it’s a superior device.
I wonder what Disney + Roku would look like... Disney has tons of content, and old content that they could throw in for free; while monetizing new movies and shows. They also has ESPN, which they have not transitioned very well to the digital age.
I have owned an Apple TV of some sort since day one.
I currently have a Apple TV 4k but also have an nVidia Shield which I like quite a bit too.
Anyone doing careful analysis of my viewing habits would put me in the "Everything is Awesome" (Lego Movie reference) category since my kids steal my phone all the time to watch stuff.
I spent 30 minutes this morning clearing out "liked" content on YouTube that wasn't MY likes but affecting what YouTube Music put together for MY suggested playlist, and popping up notices about videos and music I have zero interest in. Less than zero if it were possible. My son, his best friend, and occasionally my wife all "liked" various content but all connected to my account.
If Roku is doing targeted ads, and I'm not aware they are, they're targeting one other adult (who praise be is moving into his own place soon), a couple of old people, daughter and son-in-law, and a few assorted friends of the family ages 20-94. So selling me? Ummm, no.
Roku may be doing some ad placement but I'd guess that most of their income outside of hardware comes from licensing the Roku interface. It's become an attractive selling point for a couple of the TV manufacturers.
Superior to what? The crappy android tv streamers? It's not a great device and is just another "me too" device following Apple's lead.
Not even close. I had to deal with a Roku while house sitting and you'd have to pay ME to use it. I'm used to the futuristic Apple TV Siri Remote and its simplicity so searching on Roku was a PAIN. It would take me about 45 seconds with latency and clicking buttons just to move over a letter where it would take me maybe 5 seconds using voice on Siri or 15 seconds swiping. Roku was such a pain I stopped using search.
Also so many ADS.
To be fair just 20 years ago if any said what Google and Amazon would do in the future people would have laughed at them. In 20 years people could be comfortable with being punished for the content they consume.
"Cooking the frog slowly."
Baby steps....
http://www.businessinsider.com/heres-how-roku-makes-its-money-2017-9
https://variety.com/2018/digital/news/roku-q1-2018-earnings-1202804874/
Roku may or may not be inserting ads in your stream, but that’s not what the CEO said. What he said was that they are harvesting data about you without your permission or knowledge, and in the case of Smart TVs that they are likely using the built-in AV tech to find out even more about you than just “what you watch” because their former business model (selling you hardware and support) was a failure.
Regardless of to what degree you think Roku is spying on you and selling that data to anyone and everyone with cash, they didn’t ask you for permission to do that. That’s the point. It tells you a lot about what they think of their customers, oops sorry, their product.
I’m much relieved I never bought a Roku, or a spy ... oops, “smart” ... TV. It used to be that Apple’s superior operating system and engineering kept me loyal to the company, but now it’s their stance on privacy and security. And if you’re smart, you will make this more of a priority too.
For those using Roku but not wanting any Roku-delivered ads based on your viewing simply checkbox "Limit Ad Tracking" in privacy settings (your iPhone has a similar setting). At the same time, or instead if you wish, reset your Advertising Identifier.
If you have a SmartTV with Roku built-in then under those same privacy settings also turn off the Smart TV Experience (if you enabled it during setup).