The next frontier of streaming is that of ad-supported services and platforms that make it easier for viewers to find the apps and channels they want. The growing adoption of connected TVs and dongles has fueled the next stage of the streaming revolution and the battle is raging between Amazon.com's (NASDAQ:AMZN) Fire TV and streaming pioneer Roku's (NASDAQ:ROKU) namesake device.
Both companies dropped important announcements on Monday that signify this phase of the streaming war is just beginning. Let's look at what each company said and what it means against the backdrop of their streaming rivalry.
A flurry of announcements
Amazon said in a press release that its Fire TV platform topped 40 million users, up from the 37 million it announced in early September. The announcement came amid an expansion of the company's Fire TV ecosystem, which now includes automotive, smart TVs, soundbars, and streaming media players. Amazon said that its smart TV lineup will include more than 50 Fire TV and soundbar models in more than 10 countries, with plans to expand that to 150 models by the end of the year.
Roku dropped a couple of press releases of its own. First, the company said 15 television brands would launch Roku TV models in the United States, Canada, Mexico, and the United Kingdom in 2020. Roku is already the No. 1 licensed TV operating system in North America, accounting for one in three smart TVs sold in the U.S. during the first nine months of 2019. This provides manufacturers with an easy way to incorporate streaming technology into their devices for consumers.
The company also introduced the Roku TV Ready Program, a certification that will identify consumer electronics brands that work seamlessly with Roku TV. The products will display the Roku TV Ready Badge, showing that the device has been certified and tested to "work effortlessly with the Roku TV, offering smooth setup, easy on-screen access to sound settings and volume control with one remote." Roku said that companies can add the certification to their products at no additional cost.
The story behind the numbers
Amazon's revelation regarding 40 million active users of its Fire TV devices is laudable, but it's also meaningless without context. In mid-June, the e-commerce giant said it had 34 million users, while Roku ended June with 30.5 million. Amazon announced in early September that the number had risen to 37 million, while Roku closed the month with 32.3 million. This shows that Amazon hasn't been able to gain much ground over its smaller competitor.
Roku has yet to release its fourth quarter results, but because of the holidays, the final quarter of the year has historically been Roku's best. Based on its recent growth rate, its active subscriber base likely grew to 35.5 million (give or take 1 million), meaning Roku continued to keep pace with its larger rival, potentially even closing the gap.
History is still being written
Amazon simply can't be ignored, as the tech giant has the resources to continue to build out its Fire TV platform, which gets prime placement (pun intended) on the company's e-commerce site. Roku has its work cut out for it, especially considering Amazon's deep pockets and massive international distribution network.
Roku has continued to defy expectations since its public debut in mid-2017, nearly doubling its active accounts to 32.3 million and growing its average revenue per user (ARPU) by 78%. This resulted in revenue that grew 109% during the period to $261 million. Considering how well Roku has fared thus far, there's simply no reason to think its success won't continue.