Last month, Roku (NASDAQ:ROKU) released more home audio products, a Smart Soundbar (which doubles as a streaming player) and a Wireless Subwoofer, as it continues to expand its hardware portfolio. In its second-quarter shareholder letter, the company noted that it had recently inked a deal with retail juggernaut Walmart (NYSE:WMT) to "offer several new Roku devices including audio products to their customers under their onn brand."
The two companies have now officially announced the co-branded gadgets. Here's what investors need to know.
Even more affordable versions
Roku and Walmart will offer low-cost versions of the Smart Soundbar and Wireless Subwoofer announced last month. The devices will be co-branded as onn Roku and be exclusively sold at Walmart for $129 each, compared to the $180 price tag that Roku charges for its single-branded variants. There are minor physical differences relative to Roku's versions.
"We know our customers shop with us for quality products at an affordable price," Walmart consumer electronics exec Ryan Peterson said in a statement. "We're thrilled to be working with Roku to deliver a new category of audio and streaming products in time for the holiday season that are easy to use and come at an incredible value."
The technical specifications for both products are comparable, including support for Dolby Audio, Bluetooth connectivity, optical support, and more. However, both of the onn Roku products have lower power output compared to the original products.
Another small area where Roku and Walmart will save on costs is the remote: The onn version will only come with a basic Roku remote instead of the more full-featured voice remote that ships with Roku's version. That voice remote retails separately for $20 and allows buyers to use voice commands to control their TVs and access popular third-party virtual assistants.
Building the platform business
Roku has long leveraged aggressive pricing, selling its media players at tiny margins in order to grow active accounts on its TV streaming platform. The tech company has also capitalized on partnerships with an expansive stable of third-party TV manufacturers to license and integrate its Roku OS, reducing the burden of having to develop and distribute its own hardware.
Those efforts culminated in an important inflection point last year, when platform revenue exceeded player revenue for the first time, with advertising being the largest component of the platform business. Roku finished the second quarter with over 30 million active accounts, with average revenue per user (ARPU) continuing to march higher to $21.06.
Meanwhile, the platform segment, which is far more profitable, continues to evolve. Roku recently started offering free content from premium subscriptions in an effort to coax prospective subscribers, and is now testing interactive ads that offer advertisers new ways to engage viewers.
"We view interactive as still emerging capability for TV advertisers," platform manager Scott Rosenberg said on the last earnings call. "It's not a capability they've traditionally had, but it's an exciting new dimension to be able to bring to TV advertising."