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Roku Is a Must-Have for New Streaming Services

By Daniel Sparks – Oct 16, 2019 at 7:01AM

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The streaming-TV platform just added another major streaming service.

Roku (ROKU -0.16%) is one of many streaming-TV platforms. The hardware for its platform exists in a crowded market that competes with over-the-top devices from tech giants like Apple (AAPL 0.14%) and Alphabet, cable companies' internet-connected set-top boxes, and gaming consoles. But Roku has two things going for it that help it stand apart from its peers: It's not competing with other streaming-TV services and it has far greater reach than any other platform in the United States.

The company's decision to avoid making its own streaming-TV service and to refrain from producing original content, combined with its leading market share, continually reinforces Roku's value proposition. This positioning as an independent market leader helps the platform attract investment from publishers and marketers and grow its user base. The latest example of Roku's position as a must-have for new streaming services is Apple's decision to bring its Apple TV app to the Roku platform.

Reese Witherspoon, Jennifer Aniston, and Steve Carell

Reese Witherspoon, Jennifer Aniston, and Steve Carell will star in Apple's The Morning Show. Image source: Apple.

Apple TV App: Available on Roku

On Tuesday, Roku announced that the Apple TV app is now available on the Roku platform. The app lets users discover shows and movies but also gives users access to their iTunes video library and lets them subscribe to Apple TV+, Apple's new streaming-TV service. 

The news comes weeks before Apple officially launches its new streaming service. Apple TV+ will make its debut on Nov. 1.

Making the app available on Roku could help provide a lift to sales of Roku devices as well as engagement on the platform. While Apple has announced less than 10 original shows that will be available on Apple TV+ at its launch, the tech giant has priced the service aggressively at $4.99 per month. In addition, Apple is including one free year of Apple TV+ for people who buy Apple devices that can stream Apple TV+.

Apple follows Walt Disney's (DIS -2.63%) decision to make its new streaming service, Disney+, available on Roku. Launching on Nov. 12, Disney+ will be available on the Roku platform from day one. 

Understanding Roku's competitive landscape

It's no surprise to see Apple TV+ coming to Roku. The Roku platform dominates the U.S. market, powering 41 million over-the-top devices and smart TVs, trouncing its next closest competitor with 36% greater market share. Furthermore, Parks Associates estimates that Roku boasts 39% of the total U.S. streaming media player market.

"Roku is a valuable partner for content providers looking to reach a large and engaged audiences," said Scott Rosenberg, Roku's senior vice president and general manager of platform business, in the company's press release concerning the launch of the Apple TV app on its platform. Put another way, any new streaming service that withholds its content from Roku is missing out on a massive, engaged audience. As of Q2, Roku boasted 30.5 million active accounts -- and users streamed 9.4 billion hours during the quarter, up 72% year over year.

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Daniel Sparks has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Apple, Roku, and Walt Disney. The Motley Fool has the following options: long January 2021 $60 calls on Walt Disney, short October 2019 $125 calls on Walt Disney, short January 2020 $155 calls on Apple, long January 2020 $150 calls on Apple, short January 2020 $155 calls on Apple, and long January 2020 $150 calls on Apple. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Apple Inc. Stock Quote
Apple Inc.
AAPL
$150.97 (0.14%) $0.20
Roku Stock Quote
Roku
ROKU
$58.09 (-0.16%) $0.10
The Walt Disney Company Stock Quote
The Walt Disney Company
DIS
$95.53 (-2.63%) $-2.58
Alphabet Inc. Stock Quote
Alphabet Inc.
GOOGL
$96.93 (-1.26%) $-1.24
Alphabet Inc. Stock Quote
Alphabet Inc.
GOOG
$97.44 (-1.39%) $-1.37

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