Roku Unruffled by Best Buy Phaseout of Roku Support on Insignia Smart Sets
Roku is unfazed with Best Buy’s decision to phase out Roku support on Insignia-branded smart TVs under the exclusive multiyear partnership it announced with Amazon last month to sell Insignia- and Toshiba-branded Fire TV Edition smart sets in the U.S. and Canada (see 1804180002), said Roku CEO Anthony Wood on a Wednesday earnings call. Roku shares tumbled 12 percent the day of the announcement on speculation it would hurt Roku revenue, but Wood expects that Best Buy, Walmart and others will sell more Roku TVs this year than they sold in 2017.
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All major retailers carry and sell multiple brands of smart TVs with Roku support, said Wood. Though Roku expects to land a big share of the smart TV space because it regards the Roku operating system as a “much, much better solution for consumers and TV companies,” it won't win all of the category, he said. As TV makers transition more toward licensed OS platforms and away from “homegrown” OS solutions, Roku won’t be “the only winner there,” he conceded. “Amazon and others -- maybe Google -- will get some share,” but Roku “is by far the biggest” and the “most well-positioned,” he said.
Roku is “deepening” its relationship with advertisers and content publishers, said Wood. “The $70 billion spent each year on TV advertising in the U.S. continues to shift to streaming as advertisers follow viewers,” he said. Streaming ads “simply work better” than those on “traditional linear TV,” said Wood. A recent IPG Mediabrands study found “ads on the Roku platform are 67 percent more effective per exposure at driving purchase intent” than ads on linear TV, he said. “It’s a great time to be in the streaming business.”
The free, ad-supported Roku Channel, seven months after its launch, “is already contributing significantly to our inventory mix in the audience that we sell to advertisers,” said Scott Rosenberg, general manager-platform business. The channel also “is proving to be a significant traffic driver, audience driver, for content providers,” he said.
This is the first spring that Roku is participating in the TV “upfront” season during which national advertisers “sit down and they plan their annual TV investments,” said Rosenberg. “That's important because it's indicative of the fact that national advertisers are starting to think holistically about how to reach consumers in the living room and recognize that a larger and larger portion of their viewers are now only available” on over-the-top services like Roku, he said. “So during those upfront meetings, we're sitting down with agencies and brands and providing them with planning tools and showing them incremental viewership that's possible on our platform. Ultimately, this is what's influencing those advertisers to make OTT a part of their annual TV budgeting process.”