The aggregation platform for streaming services Roku works on a win-win model; that is, if the industry giants see their subscriptions skyrocket, so will Roku, and if the use of Roku’s platform grows, so will the streaming operators that the platform hosts. Instead of a streaming war, what the company sees is lots of headroom for growth in Latin America. That’s what the company’s head of content distribution for Latin America, Adriana Naves, stresses in an exclusive interview with LABS.
Like other tech companies, Roku’s business model was directly benefited by the COVID-19 pandemic. Thanks to an influx of cord-cutters subscribers, people dropping cable multichannel television services for streaming services, Roku reported a 71% Y-o-Y surge in its revenues (including ad sales) in 2020, $1.27 billion worldwide.
14.3 million active accounts
That’s what Roku added globally troughout 2020.
Today, the company has 51.2 million active accounts, added through the company’s physical devices or partnerships.
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Sales of Roku’s physical devices, which connect televisions to streaming services and compete directly with Google Chromecast, Amazon Fire TV Stick, and Apple TV, rose 18% to $178.7 million in 2020’s last quarter alone. In Brazil, Latin America’s largest market, Roku arrived in January 2020 through a partnership with AOC, embedding its system in the brand’s TVs; more recently, it also partnered with Philco.
Is Roku a streaming service provider?
Roku is an aggregating platform for streaming services; that is, it encompasses the leading apps, such as Netflix, Amazon Prime Video, Disney Plus, among others, in the same interface.
Roku was founded in 2002 by Anthony Wood, who in April 2007 was named Netflix‘s VP. The idea of Roku’s DVR “was born” within Netflix. That’s because Netflix engineers developed the device, which would work exclusively for Netflix in 2007.
But close to the product’s release date, Netflix CEO Reed Hastings realized that the launch could cause friction with manufacturers, such as Sony. Hastings decided to kill the project, according to Fast Company. After that, a new Roku company was built, in 2008, with Netflix as an investor. In 2017, Roku held an IPO on Nasdaq.
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Why is every streaming service coming to Latin America?
“We are living in the decade of streaming,” says Naves. Indeed, the Latin American market has experienced an explosion of new options, as companies target the region as their first or second international market.
On Thursday, ViacomCBS‘s Paramount Plus will debut in the region alongside its launch in the U.S. In June, HBO Max will also land in Brazil and 38 countries in Latin America in the Caribbean.
One reason may be consumer engagement. According to Naves, Roku’s data show that the consumption of streaming hours in Latin America is “very large” compared to other markets. Worldwide, streaming hours within Roku increased by 20.9 billion hours year-over-year to a record 58.7 billion hours.
With so many options at hand, it’s easy to get lost in space and time. Besides, according to a 2018 study by Sandvine, a network intelligence firm, with more content choices and channels than ever before, consumers do not have good options to access all the content that may interest them and are still resorting to piracy.
That’s where Roku’s business model comes in, and with an “advanced search” option. “Our search system allows you to search Fast and Furious, for example, and the platform will give you the answer according to the price and what you already subscribe to. That is, if the movie is available on Apple TV+ for BRL 11, or if it’s part of your Paramount Plus subscription, or if it’s free on VIX, you have all this information gathered by Roku,” explains Naves.
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According to her, Roku helps users in 12 Latin American countries to turn their TVs into SmartTVs and has plans to further expand in the region.
How does Roku work?
Mexico was the California-based company’s first market in Latin America, back in 2015. Roku operates in partnership with seven television manufacturers in Mexico, and four devices. “As Mexico was the first country in Latin America in which we expanded, today it is one of the most relevant countries internationally for Roku.”
According to the executive, the devices in Mexico are almost the same as those available in the United States. Last year, Roku launched in Mexico a product that is a player and soundbar device combination, called Roku Streambar, day-and-date with the United States. “It’s a new concept, a 2 in 1 product, a speaker with a built-in player.” Naves says that Roku will follow the same strategy in Brazil – meaning that, soon, more partnerships and products will be launched in the country.
Last September, the company launched Roku Express, a device that connects to any TV to access Roku’s operating system. It costs around BRL 290 and has an app for mobile devices that works as a “virtual remote control” and allows private listening through headphones. “You can listen without disturbing anyone on your side, plugging into your cell phone. The experience of the platform is very relevant. My father and mother, who are almost 80, auditioned for me. They managed to access everything, and now can’t live without the Roku device,” explains Naves.
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Roku started a production factory in Manaus, and all the technical assistance part of the device is in Portuguese. “Our first device in Brazil is selling very well, with good acceptance for the Brazilian market,” she said, but didn’t disclose numbers.
The Roku device facilitates end-user access to streaming video that includes not only over-the-top video streaming services but also operator-based streaming and direct consumer streaming like DirectTV. “By plugging in the device, you will find several different contents, including for children, transactional content, SVOD, TVOD, and all the business models and subscription content you want,” she says.
After the user chooses the streaming channel, Roku enables subscription via a proprietary billing system, Roku Pay, which allows the user in one click to subscribe to a new streaming service or rent some content, without the need to register with each application. “Roku’s concern is to make consumers experience much easier; they will know everything that is going on, they have a place just to manage things.” Even if users do not want to pay for streaming subscriptions, Roku offers free content from PlutoTV and VIX partners.
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The Latin American streaming consumer prefers local and free content
According to Naves, the consumption of streaming through the Roku platform in Latin America grew significantly in the second half of last year, when the company added the largest number of accounts.
“Consumers in Latin America are very fond of local content. We see some interesting trends in Latin America, watching partners grow through free content. In Latin America, this is always relevant,” she adds. Among Roku’s free content partners are Pluto TV and Vix, present throughout Latin America, besides Tubi, FreeTv, Butaca.TV, and TV Azteca in Mexico.
“We see an interesting shift from traditional paid TV to streaming. A very cool case is DirectTVGo, which launched with Roku in Mexico first, expanded to Latin America, and then arrived in Brazil recently. It is going very well.”
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According to Naves, Roku also noticed the shift in consumption of on-the-spot cinema to streaming, due to COVID-19. “We see this trend in partners such as Belas Artes in Brazil, which recently launched streaming, and it is growing.” KLIC, from Cinepolis, started in Mexico with Roku and has also expanded to Latin America, except for Brazil, for the sake of the Portuguese language.
Roku launched more than 20 large partners last year, and has been seeing this issue of growing together. The company helped to expand Brazil’s Playkids, a subscription SVOD for children, as Naves recalls. “Playkids, for example, was one of our first partners in Brazil. They were already doing well in the operation and got rights to the Spanish-speaking market. As Roku has this global presence, we help partners to grow. They launched it all over Latin America and are growing.”
According to Naves, another key point for streaming in Latin America is the partners’ original content. “When Netflix is going to produce original content, we campaign only on the original content for the countries of Latin America. This is very relevant for our market.”
She says that Globoplay’s productions in Brazil are very consumed within Roku. The contents of TV Azteca and Blim in Mexico are also top on Roku’s list of most consumed content. “In Latin America the original and local content is more relevant, and we want to focus on them here.”