Investors over the last 20 months have become highly skeptical that Roku can maintain its domestic TVOS market dominance over Amazon and Google, much less establish the same hegemony over the living-room gateway OS overseas that it currently enjoys in North America. 

But as Roku’s Nasdaq price has jaggedly declined, Roku CEO Anthony Wood has stuck to the same script, describing his company's core product as the only TV operating system software truly “purpose-built” for streaming television, and insisting that it will conquer wide-open regions like Europe just the way it did America. 

Also read: Roku CEO Dismisses TiVo TVOS Threat: ‘It’s Hard to Imagine They Could Gain the Necessary Scale’

Interviewed by equity analyst Ben Swinburne at the Morgan Stanley Technology and Media Conference on Monday, Wood insisted that the “same model that is working for us in the U.S. is working for us internationally,” and that Roku is “making good progress” in international markets. 

The Roku TVOS, Wood said, is now used in almost 50% of U.S. broadband homes, with Amazon Fire TV and Google TV/Android TV used in only a “single-digit” percentage of the market. 

“Both of those companies are growing market share, but they’re still tiny,” Wood noted. “The biggest opportunity for us to continue to grow is by taking share from LG, Samsung and Vizio. Those are the TV companies that are left in terms of material market share other than Roku.”

Wood said he doesn’t believe the “TV companies” have the resources and will to “amortize the cost” of building a global gateway OS and advertising business. 

Also read: Roku (Finally) Surges on Better-Than-Expected Q4 Revenue

Outside the U.S., Wood continued to tout the progress Roku has made in Canada and Mexico. In these regions, Roku has progressed past the point of merely working to establish viable bases of active users. It has imported the Roku Channel ad-sales juggernaut into these countries and is now staffing up its local ad sales teams to begin the all-important task of monetization. 

For Roku, the narrative challenge is convincing investors that it can do the same thing in regions like Europe, a wide-open market for gateway OS at this point, despite the fact that Roku has made little progress infiltrating these regions to date. The vast majority of Roku's 70 million active users remain in North America. 

Making the challenge more austere: Google is ahead in Europe and other markets with Android TV and its offshoot, Google TV. 

Wood conceded that “Google is more widespread around the world,” but that’s only because “Android is a global phone OS.” 

Further, he noted that Android TV actually preceded Roku into the U.S. smart TV market before Roku surpassed it. 

“As Roku enters into a market, we quickly start to grow market share, and we start to take market share in that country,“ Wood added. “We’re seeing that dynamic play out in all the markets we’ve entered.” ■

Roku CEO Anthony Wood continues to declare that the global competition for gateway TVOS dominance is between the entrenched incumbents including his company, Amazon, Google, Samsung and LG, and that latecomers such as Xperi's TiVo unit face too many barriers to catch up. 

Also read: Roku (Finally) Surges on Better-Than-Expected Q4 Revenue

On Wednesday's fourth-quarter Roku earnings call, Needham & Company analyst Laura Martin asked about the barriers smart TV makers face when deciding to replace incumbent operating systems like Roku with newer market entrants, specifically mentioning TiVo. 

"That's not a significant player right now in TiVo, and it's hard for me to imagine that a new entrant would be able to gain the necessary scale and technology -- and just size of the of everything -- that's needed to be in that business. It would be quite difficult," Wood responded.

Xperi, which purchased TiVo for $3 billion three years ago, recently launched a Linux-based TiVo-branded OS in Europe in collaboration with Vestel, the most prolific shipper of smart TVs in the region. 

Xperi believes it can catch up to the market incumbents quickly by introducing a highly customizable OS solution to smart TV makers that gives them more control of branding, data collection and advanced advertising relative to the software provided by big tech companies like Roku, Google and Amazon. (You can still listen for free to Next TV's sponsored webinar with Geir Skaaden from back in November, in which the Xperi products chief lays out the company's TVOS strategy.)

Comcast also has plans to compete for gateway control for the global connected living room via Xumo TV, the streaming joint venture it has established with Charter Communications that's still in its early days. 

Xumo TV already has a head start in Europe via the entrenched base of Sky pay TV set-tops, with Comcast having purchased that operator in 2018.

For its part, Roku continued Wednesday to hammer home its dominance in North America. In the U.S., for example, 38% of the smart TV's sold are powered by Roku, more than the Nos. 2 and 3 TVOS providers (Samsung and LG, respectively) combined, Roku said. 

Amazon Fire TV and Android TV/Google TV occupy only single-digit share percentages, Roku added. 

Roku also said it's TVOS controls a market-leading 30% of connected TVs in Mexico and also dominates Canada. 

Still, asked by Wells Fargo's Steven Cahall if Roku has experienced a "significant contribution" to its overall bottom line from its "international expansion," Roku executives completely ignored key emerging TVOS markets outside North America, notably the European theater, arguably the world's second most advanced streaming video market behind the U.S.

Check the earnings call transcript -- they didn't mention "Europe" even once. 

Still, taking a stab at Cahall's question, Roku's soon-to-depart longtime CFO, Steven Louden, attempted to frame the global TVOS battle as still being in its early days, even in the U.S. -- a context that seems to bely Wood's notion that the game is baked to outsiders. 

"The global ARPU that you see on the statements is really driven by the U.S. because many of our markets Internationally, we're still focusing on driving scale and engagement, although we have notably in 2022, started to have additional markets that are monetizing," Louden said. 

As of late-day trading Wednesday on the Nasdaq, Roku shares were up around 32% vs. 24 hours earlier, following the company's report that it soundly beat analysts' consensus forecasts on revenue in the fourth quarter. 

Wall Street seems to base Roku's volatile valuation on the whims of its quarterly ad revenue. But the longer term issue for Roku is whether a.) it can sustain its market dominance domestically, and b.) if it can expand that hegemony overseas. 

If it can accomplish these goals, and vastly expand its platform around the planet, revenue would seemingly grow into time in memorial.

So how important is controlling the gateway OS to a company like Roku. Examine the power of the Roku home-screen menu. 

In its Q4 letter to shareholders, Roku noted that twice as many streaming hours on its platform originated from items on its home screen menu vs. those placed in other portions of the Roku platform. 

The major smart TV makers who supply their own operating system will eventually give up and license a third-party OS from either Roku, Amazon or Google, Roku CEO Anthony Wood said. 

Speaking Monday at the Morgan Stanley Technology, Media and Telecom Conference, Wood said the streaming OS business would someday resemble the operating platform paradigm for smart phones, where Google's Android and Apple's iOS dominate a narrow field of OS contenders. 

More and more, it's the native OS of the smart TV that drives connected TV viewing, Wood said. And the platforms powering these TVs will consolidate over time.

Also read: Roku Ready To Make Streaming Pitch to In-Person NewFront

"We still have a lot of people using Samsung, LG and Vizio, but over time, they're going to switch to licensing third-party operating systems," Wood said. 

"The economics of monetization, feature sets and the resources just don’t support [an over-abundance] of solutions for streaming OS," he added. 

With more than 60 million active accounts, Roku is the leading supplier of connected TV OS in the U.S., which Wood called "an advanced market." 

As Roku has proliferated to markets like Mexico, it has quickly grown its market share, he added, noting that Roku has gone from zero to 20% market share of connected TVs in Mexico in just a few years. 

Operating systems including Samsung's Tizen and LG's webOS are big in regions like Western Europe, Wood noted, but that's only because Roku is just starting to deploy itself there. "Once Roku enters a market outside the U.S., our share starts to grow," he added. 

Eventually, the ad-supported side of the streaming business may get to a point in which OS providers scale of certain degree that is "big enough to ride the ride." But in the here and now, it seems hard to believe that Samsung, LG and Vizio would just give up. 

Samsung said last year that its Tizen OS is in 1.28 billion devices worldwide. And last week, Vizio said that active accounts for its SmartCast OS grew by 24% in 2021 to reach 15.1 million globally. ■

Amid a jagged but steeply upward trajectory that has seen its market capitalization increase to just below $50 billion, Roku has often been compared to Netflix, a company that also had its roots in physical goods (DVDs) but made its real bones in streaming content. 

With Roku executing a somewhat similar pivot — branching out into original shows and movies, and making far more selling advertising on the Roku Channel than selling hockey-puck-style OTT players and licensing smart TV OS — CNBC interviewed company founder and CEO Anthony Wood. 

Writer Alex Sherman penned a can’t-miss 3,365-word deep dive into a Roku company history that’s inextricably tied to Netflix, blended with some essential forward-looking analysis that requires unmistakable comparisons to the world’s most profitable streaming company. 

Also: Wood Says Samsung, LG, Vizeo Will Eventually License OS From Elsewhere 

Again, we’re just aggregating a darned fine piece of media-tech journalism here — so here’s that CNBC link again. And for the sake of abstracting this lengthy read, and justifying our posting on it, here are six nuggets that we thought were particularly interesting. 

> The Manchester-born Wood, who ended up living in Texas and getting an electrical engineering degree from Texas A&M, founded ReplayTV in the 1990s. As you may recall, ReplayTV had a kind of “betamax” role vs. TiVo in the formative years of the DVR. (Although, unlike Sony’s seminal "format war" with JVC's VHS two decades before that, ReplayTV wasn’t necessarily the superior device.) Wood did end up selling ReplayTV to SonicBlue for $120 million, affording him the ability to up his game as a video tech entrepreneur. 

> In the early aughts, more than a decade prior to the emergence of Spotify, Wood created a music streaming device to compete with Apple’s download-focused iPod player. “I was a little early on that one,” he conceded to CNBC. 

> After meeting Netflix founder and co-CEO Reed Hastings at conference events, Wood nagged -- and convinced -- Hastings to let him build a connected TV gadget for Netflix. “There was Xbox and PlayStation and Samsung and Apple TV,” Hastings said, describing the limited number of devices available 2008 that would allow users to stream internet video on their TVs. “Frankly, we didn’t think Roku had much of a chance.” Wood worked as a part-time Netflix employee for nine months, while also still leading the 15-person Roku team. Ultimately, Hastings bailed on the project, fearing that other platform providers wouldn’t support the Netflix app if the company had its own proprietary connected TV device. 

> Roku crafted a simple, elegant user interface, with an equally simplistic remote control design. “Many companies just don’t really understand the attitude people have when they’re watching TV,” Wood said. “People want to sit there, drink their beer, and watch TV.” Roku hardware achieves niche popularity, but Wood’s pitch was — then and to this day — about the platform. Once it’s infiltrated, Roku will become an essential arbitrator of content and ad sales. But Silicon Valley investors still see Roku as a hardware company, one whose tech can be easily copied. “We’ve had less acquisition offers than is normal for a company as successful as Roku,” Wood said.

> But there some venture capitalists who believe in Roku, notably Menlo Ventures’ Shawn Corolan, who helps lead the company to its successful IPO in 2017, mainly by focusing it on growth of its platform revenue. And there were some suitors. In 2012, Intel, which was developing the OnCue video tech platform that it eventually sold to Verizon, offered to pay $450 million to Roku. Wood wanted $1.5 billion, a number he arrived at based on the money he thought he’d need to fulfill his dream, founding a university in his home state of Texas. Later, Amazon offered $300 million: Roku was willing to go down to $690 million, but the two sides couldn’t reach an agreement. 

> With Wood now focused on building the Roku Channel, and starting to license and purchase original content to feed that beast, CNBC makes inevitable comparisons to Hastings and Netflix, who bought pretty much any piece of content they could get their hands on in the more formative “Albanian Army” years of Netflix streaming. MoffettNathanson principal analyst Michael Nathanson has advice for any media company which might offer support to Wood’s latest pivot: “I’d argue companies giving Roku content are digging their own grave,” he said. ■ 

Roku reported a 50% year-over-year rise in third quarter revenue to $260.9 million, as it continues to experience huge advertising growth on its platform.

In fact, “platform revenue” as the streaming company calls it, increased by 79% to $179.3 million in Q3—notable, given that ad sales for Roku surpassed its hardware business only last year. “Player revenue”—the amount of money generated by selling Roku OTT boxes, dongles and smart speakers—increased by 11% to $81.6 million in the third quarter.

Roku, which has been the hottest—and at times, most volatile—stock in the streaming video world over the last 18 months, beats analysts’ forecast in terms of revenue, gross profit and adjusted EBITDA.

Related: Roku to Acquire OTT Ad Firm Dataxu for $150M

Active users for the platform increased by 1.7 million during Q3 to 32.3 million, while the number of hours streamed in the Roku ecosystem increased by 0.9 billion during the quarter to 10.3 billion.

Average revenue per user was up 30% to $22.58, while gross profit increased by 50% to $118.5 million.

In their letter to shareholders today, Roku CEO Anthony Wood and CFO Steve Louden tied Roku’s expansion directly to the ongoing spike in cord-cutting.

“According to eMarketer, around 56 million households in total will have canceled cable or satellite TV subscriptions by 2023,” the letter said. “Approximately 1.7 million consumers cut the cord in Q3 alone. Our own research indicates that roughly 50% of U.S. cord cutters are Roku customers, and cord cutters who choose Roku products are highly satisfied with the decision and extremely unlikely to consider returning to a traditional pay TV subscription.”

Roku will conduct its quarterly earnings call Wednesday at 5 p.m. EST. 

Roku reported a 50% year-over-year rise in third quarter revenue to $260.9 million, as it continues to experience huge advertising growth on its platform.

In fact, “platform revenue” as the streaming company calls it, increased by 79% to $179.3 million in Q3—notable, given that ad sales for Roku surpassed its hardware business only last year. “Player revenue”—the amount of money generated by selling Roku OTT boxes, dongles and smart speakers—increased by 11% to $81.6 million in the third quarter.

Roku, which has been the hottest—and at times, most volatile—stock in the streaming video world over the last 18 months, beats analysts’ forecast in terms of revenue, gross profit and adjusted EBITDA.

Related: Roku to Acquire OTT Ad Firm Dataxu for $150M

Active users for the platform increased by 1.7 million during Q3 to 32.3 million, while the number of hours streamed in the Roku ecosystem increased by 0.9 billion during the quarter to 10.3 billion.

Average revenue per user was up 30% to $22.58, while gross profit increased by 50% to $118.5 million.

In their letter to shareholders today, Roku CEO Anthony Wood and CFO Steve Louden tied Roku’s expansion directly to the ongoing spike in cord-cutting.

“According to eMarketer, around 56 million households in total will have canceled cable or satellite TV subscriptions by 2023,” the letter said. “Approximately 1.7 million consumers cut the cord in Q3 alone. Our own research indicates that roughly 50% of U.S. cord cutters are Roku customers, and cord cutters who choose Roku products are highly satisfied with the decision and extremely unlikely to consider returning to a traditional pay TV subscription.”

Roku will conduct its quarterly earnings call Wednesday at 5 p.m. EST. 

Santa Clara, Calif. -- Founder and CEO Anthony Wood credits Roku’s ability to compete with larger companies in the area of streaming television platforms in part with having been an early innovator in the space.

“Being first is actually pretty important a lot of the times,” Wood said Wednesday in a keynote interview with B&C contributing editor George Winslow Wednesday at the B&C and Multichannel News NextTV Summit.

Wood also touted his company’s focus on one service—streaming content to the television screen—as a competitive advantage, saying Roku has more people devoted to that task than larger competitors have devoted to working on similar products.

“If you’re at Google you’re working on searches,” he said. "If you’re at Apple you’re working phones—or watches, I mean.”

Wood noted that the company’s first set-top box was called “The Netflix Player,” and offered access only to Netflix. Today, he said, Roku offers more than 1,600 channels.

He also touted the downward trend of pricing on Roku’s boxes, which used to cost $99 and now cost $49. Wood was dismissive of competition from video game consoles, which he said work not because they offer a great product, but because “people who play games like to watch TV as well.” He added that Microsoft, when it released its Xbox One last year, touting it as a hub for all living-room entertainment, “really fell down and started losing market share until they regrouped and started to focus on games [again].”

Predicting the death of live television viewing except in cases of major events and sports, Wood said that the world of on-demand viewing presents major challenges to television networks, who will not be able to use linear scheduling to help launch and promote new series. He also said in time, that cable providers will no longer provide customers with set-top boxes—citing Time Warner Cable’s Roku app as an example.

“Play TV is not going away but the boxes are going away. They’re going to become apps on platforms like Roku.”

But one thing Wood does not anticipate is a move by his company moving into content production.

“Our whole business model is we are a platform for distributing content,” he said. “We don’t produce our own content. We have no pans to do that, at least not yet.”

Maker Studios chief content officer Erin McPherson is set to keynote Next TV Summit San Francisco.

She joins previously announced speakers Anthony Wood, CEO and founder of Roku; David Wertheimer, president of digital, Fox Broadcasting; Marc DeBevoise, executive vice president/general manager, entertainment, sports & news, CBS Interactive; Colleen Fahey Rush, executive vice president, chief research officer, Viacom Inc.; Bonnie Pan, executive vice president, programming, Maker Studios; Will Keenan, president, Endemol Beyond; and Chris Pizzurro, head of product, sales and marketing, Canoe Ventures.  

The two-day event, which takes place at the Santa Clara Marriott in Santa Clara, Calif. Sept. 10-11, will kick off with an opening presentation from media investors Jeff Sagansky and Harry Sloan, who cofounded Global Eagle Entertainment and Silver Eagle Acquisition.

Next TV Summit & Expo is a high-level conference, expo and networking event presented by NewBay Media, the parent of Multichannel News and B&C.

For more information about the event, including the agenda and speaker bios, visit: http://nexttvsummit.com/sf/

To register, visit: http://nexttvsummit.com/sf/registration