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.
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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.
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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.” ■
