Roku to Power Hisense TVs in the UK

Roku has signed a deal with Hisense to power the Chinese CE maker’s smart TVs with its operating system in the UK.

What amounts to an expansion of Roku's Hisense deal, disclosed by Roku CEO Anthony Wood in an during his keynote at the IFA Show in Berlin, is a significant step for Roku, which is competing fiercely with Amazon, Google and other tech and consumer electronics brands to control the user ecosystem that delivers over-the-top services like Netflix, Hulu and Disney+.

Right now, Roku and Amazon dominate North America and are both on quests to extend their hegemony to Europe and Latin America.

Earlier this week, Amazon announced its own set of European device deals with CE partners for its Fire TV platform, including Grundig, JVC and Toshiba.

Under the agreement with Hisense, the company will market Roku-enabled smart TVs in the United Kingdom, starting in the fourth quarter, with also infiltrate other European countries.

"We're the leader by a wide margin in the U.S., and we're just starting to get serious about international markets," Wood told Reuters at IFA consumer electronics fair in Berlin, the same event at which Amazon made its recent announcement.

Wood called the Hisense deal “a stepping stone to the rest of Europe.”

Roku said it had 30.5 million active users as of the end of the second quarter. In its own IFA announcement, Amazon declared Fire TV’s active user total to be 37 million.

Research company Convivia reported last month that Roku’s operating environment powers 43% of the world’s connected TV devices—everything from smart TVs to HDMI dongles the little boxes that sit on top of smart TVs. Amazon Fire TV, which has the next biggest market share, controls only around 18% of connected TV devices, Convivia said.

For Roku, which has seen its stock price nearly quadruple this year, growth is directly tied to the proliferation of the Roku ecosystem.

Roku generated $250.1 million in revenue in the second quarter, a 59% year-over-year uptick. The majority of that revenue, $167.1 million of it, was generated off of “platform revenue”—that is, selling advertising off apps that exist in the Roku ecosystem, such as AVOD service The Roku Channel.

Roku’s platform business is growing fast—86% year-over-year in Q2. The hardware business isn’t too shabby, either, growing at 24% to $82.4 million. But increasingly, Roku’s business is about the operating system and selling ads within it. Hardware is, also increasingly, a means for Roku to expand its global reach.

Roku has a small presence in the UK, France, but it’s real international presence is currently percolating, with the company looking to hoist a major Latin American push that will start out in Brazil—the same country that began Netflix’s global domination push back in 2011.

Netflix is actually just a company that makes content apps that fit into the Roku ecosystem. Roku makes the ecosystem, as well as apps that fill it up (like Roku Channel) and the hardware that enables that ecosystem (like the sound bar). Also unlike Netflix, Roku doesn’t make original content.

Still, Netflix is the OTT company that Roku is often compared to most these days.

On November 1, 2011, Netflix stock bottomed out at $9.22 a share. Less than two months earlier, the subscription streaming company began its international expansion to 43 countries and territories in Central and South America, as well as the Caribbean. Brazil became the first Latin American country Netflix launched into, with service starting on September 5, 2011. As of midday trading today on the Nasdaq, Netflix is trading at $289.47 a share.

Roku which was trading below $30 a share last year, was closing in on a share price of $160 last week.

“In our view, Roku will experience similar phased stages of international growth as Netflix did during its international expansion,” analyst Ralph Schackart said in a note to clients late last month.

Added Wood: "Our goal is to be the leading streaming platform for households.”

Daniel Frankel

Daniel Frankel is the managing editor of Next TV, an internet publishing vertical focused on the business of video streaming. A Los Angeles-based writer and editor who has covered the media and technology industries for more than two decades, Daniel has worked on staff for publications including E! Online, Electronic Media, Mediaweek, Variety, paidContent and GigaOm. You can start living a healthier life with greater wealth and prosperity by following Daniel on Twitter today!