Roku claims to be in almost half of all broadband homes, and that scale is helping The Roku Channel compete with other top FAST services. However, most of the homes Roku is in are likely shared with another TV OS provider.
Roku’s business is still dominated by the US
In the Q3 2023 earnings, company executives repeated several times that Roku could now reach almost half of broadband homes. Company CEO Anthony Wood emphasized how important that makes the company to the CTV ecosystem:
“In the US, our scale is approaching half of broadband households, that makes us a tremendously important platform to be involved in for everyone in the ecosystem.”
How many US households have an active Roku device? There are 130 million occupied US households, and 90% have broadband. So, if Roku’s penetration is “approaching half,” around 57 million have at least one active Roku device. In other words, 75% of the 75.8 million active Roku accounts are in the US, and 25% are in international markets.
The limitations of Roku’s reach
The ability to reach more than 40% of occupied US homes certainly makes Roku the most important TV OS provider in the US market. It also claims to be a major force in Mexico and Brazil. However, outside those countries, it is a minor player, far behind global players such as Samsung, LG, Google TV, and Amazon Fire TV.
Even inside the US, it is doubtful that Roku “owns” many whole households. The average US home has 2.3 TVs, and the chances are that each home owns different brands of TVs. Samsung is the only brand that seems to command loyalty among purchasers. According to TiVo data, 21% of homes with two smart TVs purchased Samsung for both, while 9% purchased two LG TVs and 5% two Vizio’s. Alas, brands selling Roku-powered TVs did not feature as popular pairings in the two or three smart TV-owning homes.
So, while Roku may be able to reach “almost half” of broadband homes, it likely owns a much smaller share.
The Roku Channel benefits from Roku’s TV OS
The Roku Channel (TRC) has benefited greatly from the growth of Roku active users in the US. The company regularly boasts that TRC is a top performer on Roku-powered devices. Q3 2023 was no exception, with CEO Anthony Wood placing the channel above popular SVOD services like Paramount+:
“And The Roku Channel remains the top 10 streaming app with engagement comparable to Paramount Plus, Peacock, and Max, according to Nielsen.”
Other sources suggest TRC is doing well, but only as well as its FAST peers. Comscore says that in May, 17% of US streamers said they watched TRC, but that Tubi and Pluto TV each commanded an 18% share.
ARPU remains a challenge
In the first half of 2023, Roku saw the average revenue per active user stagnate at $40.67, a value only marginally higher than it was two years ago. However, the company saw modest growth in ARPU in Q3, increasing by 1% to $41.03, though it was still down by 7% over Q3 2023.[i] Dan Jedda, Roku’s Chief Financial Officer, commented on the ARPU results:
“In Q3, ARPU was approximately $41 on a trailing 12-month basis, down 7% year over year but up quarter over quarter for the first time since Q3 of last year.”
The company has been pointing at the weak advertising market for its poor ARPU performance. The ad market also doesn’t seem to be recovering yet. The increase in ARPU seems to have come from a modest 1% increase in the amount of time each Roku active account spent streaming. The average active device streamed for 3 hours and 56 minutes daily in Q3 2023.
Interestingly, the weak ad market has not impacted Roku’s competitor, Vizio. It has posted consistent ARPU gains for the last two years.
[i] Roku calculates ARPU as average annual rate calculated over the previous 12-month period.
