Amazon Competes with ROKU – Or Does It? Amazon has hardware called the Fire TV, or the Fire TV stick. It turns a TV into a smart TV, much like the ROKU box and ROKU sticks do.
If we look myopically at this type of device, here are the latest market share numbers:
* Roku: 37%
* Amazon Fire: 28%
* Apple TV: 15%
* Google Chromecast: 14%
So, here we see ROKU with the lead and certainly, Amazon Fire is a strong second place competitor.
But that’s just the streaming device world — this does not include the Smart TV world. By smart TV, we mean the actual metal and glass box — the actual TV, not the little devices.
Those smart TVs make up about as much of the market in total as all of the streaming sticks and boxes. While ROKU leads the device and stick world, Samsung owns about 50% of the Smart TV world.
And to make things worse, Samsung decided to create its own operating system, so it does not have ROKU running in the background. That’s what Wall Street says out loud. But is there a different story…?
On March 20th, 2018, Roku announced that The Roku Channel, is expected to be available this summer on select Samsung smart TVs. And it turns out, yes, Roku’s Channel is on Samsung.
Amazon doesn’t have Samsung as an outlet, it is playing in just one growing area, but just one. Now remember that when we get to ad selling.
ROKU’s strategy is much broader in that it aims to be the operating system for all smart TVs, Amazon is a bit more myopic in its approach — it wants Fire TV to flourish and now seems an advertising opportunity by imitating ROKU in the free website part of the business.
So, here comes Amazon with a free website only for Fire TV uses. This is going to be separate from Amazon Prime, as far as we know today (things change).
The advertising market ROKU, and now Amazon, are after is the TV ad business, which in the U.S. alone is more than $70 billion and more than $200 billion globally.
Roku’s ad business is estimated at around $200 million over the past year, growing at nearly 100% year-over-year. Right now, none of this matters. But the future does matter, so let’s look at that.
With the launch of Audience Marketplace, Roku is extending these advanced targeting capabilities to major publishers, as part of an effort to enhance advertising flowing through its platform, and to help publishers make their offering more compelling in an increasingly programmatic, data-driven TV advertising market.
Those are the company’s words.
Roku is leveraging its data and its technology to take on linear TV. The real threat is not from standard TV, nor is it from small ecosystems like Amazon, but in fact from the largest content providers that are now bundled with cable providers — and exhibit 1 is AT&T.
AT&T has a huge cable business (25 million subscribers) and now it has a huge content business coming from its merger with Time Warner.
But, mega media mergers are happening — AT&T and Time Warner happened in March of 2018. Disney just acquired Fox.
AT&T also has a market place for ads, but Disney and Comcast won’t play in that sandbox. And both of those companies are seeing subscriptions fall, while ROKU is seeing tremendous growth.
Cord cutting is happening, and while the mega mergers were designed to alleviate the pain of cable cancellations by turning the content into stand alone apps — there are only so many apps consumers are going to buy — and right now it looks like Netflix, YouTube and Amazon Prime are about as much as people want.
And then there’s ROKU — where every app (YouTube included) is available. Even a standard linear cable subscription is available for streaming. And since the giants are going to want a market place, and they will likely not participate in each others’, that leaves Roku — the agnostic, fast growing disruptor.
The ad buyers are going to want a simple solution, and they are going to want a place where users are growing, viewership per day is highest, and every content provider will be available. That is called Roku. That is the bullish narrative and that is what ROKU announced with Audience Marketplace.
Amazon will have an offering for marketers, and it will work, and it will take some piece of the $200 billion pie, but it will be small and contained to Amazon hardware users.
Again, the real money, the real advertisers, they want one stop shopping — and there is only one “one stop” — it’s called ROKU, and that does not change with Amazon’s Fire TV free website.
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