In the first quarter of 2023, Roku continued strong, active account growth while engagement and ARPU growth stumbled. Vizio’s active user growth slowed, but engagement and ARPU growth shot ahead.
Vizio and Roku have similar strategies and goals in the connected TV market. I compare their performance in active accounts, CTV engagement, and ARPU to anoint each category’s size and growth winner.
nScreenMedia is partly supported by its sponsors, and we’ve had some great ones, including Gracenote, Verizon, TiVo, Metrological, and many others. If you’d like to become a sponsor and help keep the lights on here, send an email to sales@nscreenmedia.com. There are many benefits, including being acknowledged in the podcast and being able to run banners on the site.
What’s new with Vizio and Roku in Q1 2023
Vizio worked on improving usability in the first quarter with several improvements to the user interface. Most interesting was the WatchFree+ mini guide, which allows viewers to continue to watch a channel while browsing others. The addition of a “recently used apps” button will also be gratefully received by users. The company delivered a four-part original series in collaboration with BetMGM to celebrate March Madness called 3 Pointers. Vizio continues expanding the channels available in its WatchFree+ FAST service. For example, it added nine new live channels and 150 on-demand movies from AMC.
Roku continues to work towards becoming a full-funnel ad platform with a new partnership with Cox Automotive. It also expanded offerings in its FAST service, The Roku Channel. One standout deal with WB Discovery brought top content like Westworld and Say Yes to the Dress to the FAST service. It also expanded its slate of originals with three unscripted offerings, Fight to Survive, Reptile Royalty, and UFO Cowboys.
Monthly active accounts
Size winner: Roku- Growth winner: Roku
Roku and Vizio define active accounts slightly differently. Both look at the last 30 days of the period of interest to determine active accounts:
- Vizio defines an active user account as a TV connected to the Internet that activates the SmartCast interface
- Roku defines it as a Roku-powered device that has streamed content.
Though the two measures are slightly different, they both give a good indication of the success of both TV platforms. Roku added 10 million active accounts between Q1 2022 and Q1 2023, growing by 17% to reach 71.6 million. Vizio boosted active accounts by 2 million, growing by 12% to reach 17.5 million.
Likely, Roku will always outperform Vizio in the area of active accounts. Various smart TV manufacturers, including TCL and Hisense, use Roku OS. It grows with the broader expansion of the connected TV market. On the other hand, Vizio only grows based on the sale of Vizio TVs. Shipments of the company’s TVs were way down in the first quarter and activation were even worse, adding just 0.1 million to reach 17.5 million.
Connected TV engagement (9:00)
Size winner: Roku- Growth Winner: Vizio
Roku and Vizio define engagement differently. Roku counts the total hours spent streaming on Roku-powered devices. Vizio reports the aggregate time spent in the SmartCast interface and streaming time initiated from apps within the interface. Comparing the two is worthwhile since both measures include total streaming time initiated from the TV OS.
Both companies gained engagement ground between Q1 2022 and Q1 2023. Roku’s streaming minutes increased by 3%, reaching 231 minutes per day per active user. Vizio’s SmartCast engagement time increased by 6% to reach 182 minutes per day per active user.
Vizio’s changes to the user experience could be paying off in engagement time growth. It fully leverages the hero bar – visible every time the TV is turned on – to drive usage of WatchFree+ content and partner video services. Roku has changed its menu bar to add free and live content items accessible with one remote click, but the focus on app icons in the home display leaves little room to push content.
The average revenue per user (ARPU)
Size winner: Roku- Growth winner: Vizio
Vizio and Roku calculate ARPU roughly the same way: it is an annual figure based on Platform business revenue, averaged across the number of active accounts over the previous four quarters. With several years’ head start on Vizio in the business of advertising, we should expect Roku to be far ahead, and the company is. Roku’s annual ARPU in Q1 2023 was $40.67 versus $29.20 for Vizio. On the other hand, Roku’s ARPU fell more than $2 (-5%) in 2022, while Vizio’s grew $5.48 (+23%) to reach $29.20.
Roku has suffered from the big pullback in ad spending in the second half of 2022, which has continued into 2023. Vizio, on the other hand, seems unaffected by the broader ad market trends. Some of the success is due to the growth in engagement. But the company also seems to be doing a good job leveraging the ACR(automatic content recognition) data it collects from its TVs. According to Katherine Pond, Group VP of Platform Content, Partnerships, and Programs at Vizio, the company shared ACR data with a content partner that showed one of its on-demand titles was a surprise hit with viewers. The content partner launched a channel based on the title, and Ms. Pond says the channel was a big success:
“We tried it out together, and not only was it wildly successful on WatchFree+, but they also ended up distributing it to a couple of our competitors in the market as well because it was doing so well.”
The bottom line
As long as Vizio grows active users based solely on the sales of its TVs, it will remain much smaller than Roku regarding the number of active users. However, it is outperforming Roku in engagement and ARPU growth. ARPU performance is particularly impressive in a down ad market and keeping in mind Roku’s heavy investment in ad technology and partnerships.
