Roku: One Stop Streaming Shop - [Business Breakdowns, EP.116]

This is Jesse Pujji and today we are breaking down Roku. With all the hype about social media and smartphones, it’s easy to forget that the average American still spends over 5 hours a day watching TV. And while the streaming wars get most headline attention, the battle for the user interface of smart TVs also has billions of dollars at stake. Here, Roku has emerged as an unlikely frontrunner, ahead of Samsung, Google, Amazon and other giants. To breakdown Roku, I am joined by Joe Frankenfield, Portfolio Manager at Saga Partners. We cover Roku’s history, dive into its income statement, unpack why it is the leading Smart TV platform in the US, and what the future holds for it. Please enjoy this breakdown of Roku. For the full show notes, transcript, and links to the best content to learn more, check out the episode page here. ----- This episode is brought to you by Tegus, the modern research platform for leading investors. Tired of running your own expert calls to get up to speed on a company? Tegus lets you ramp faster and find answers to critical questions more efficiently than any alternative method. The gold standard for research, the Tegus platform delivers unmatched access to timely, qualitative insights through the largest and most differentiated expert call transcript database. With over 60,000 transcripts spanning 22,000 public and private companies, investors can accelerate their fundamental research process by discovering highly-differentiated and reliable insights that can’t be found anywhere else in the market. As a listener, drive your next investment thesis forward with Tegus for free at tegus.co/patrick. ----- Business Breakdowns is a property of Colossus, LLC. For more episodes of Business Breakdowns, visit joincolossus.com/episodes. Stay up to date on all our podcasts by signing up to Colossus Weekly, our quick dive every Sunday highlighting the top business and investing concepts from our podcasts and the best of what we read that week. Sign up here. Follow us on Twitter: @JoinColossus | @patrick_oshag | @jspujji | @zbfuss | @ReustleMatt | @domcooke Show notes (00:02:35) - (First question) - What is Roku: its scale and business model (00:04:37) - The history of Roku, major milestones, and the evolution of streaming (00:09:04) - The evolution of the content landscape after the inception of Roku’s device (00:10:59) - The steps Roku is taking to become the choice provider for consumers (00:14:10) - A breakdown of Roku’s revenue streams (00:18:04) - Advertising versus subscription models (00:18:37) - Mental models for determining the size and scope of the company (00:19:48) - How Roku acquires new customers, how marketing differs from old-school cable acquisition methods (00:21:20) - Reasons why Roku has won the majority market share (00:28:00) - Roku’s founder Anthony Wood’s importance to the business nowadays (00:29:04) - How Roku distributes its profits (00:31:14) - Roku’s acquisitions to date and the reason why the company has not yet been acquired by a bigger player (00:32:38) - Internal and external factors that could make or break Roku’s growth expectations over the next 5 years (00:39:09) - The lessons that can be taken from the Roku story for platform builders and investors (00:41:37) - Learn more about Roku: Media in the Digital Age | We Now Disrupt this Broadcast | The Business of Media Distribution