The competition for viewer eyeballs on video streaming platforms is a two-dog race between Amazon.com (AMZN 1.49%) and Roku (ROKU 2.94%).
Although the latter leads in the number of devices used and in dominating next-generation smart TVs, with its brand accounting for 1 out of every 3 sets sold and coming with the Roku platform installed, Amazon announced ahead of last week's Consumer Electronics Show that in one area, at least, it is pulling away: the number of active users.
Image source: Getty Images.
Amazon said that it now has more than 40 million users, or some 6 million more users than it declared last May, for an 18% increase. And in the contest with its closest rival, it is also well ahead of the 32.3 million active users Roku reported with its third-quarter results in November.
But that lead won't last for long -- at least, not the magnitude of it -- and other caveats, although they don't diminish Amazon's achievement, suggest Roku is the true leader even in this niche.
Still neck and neck
Although Roku trails Amazon in monthly active viewers and has for some time, it's likely that when it reports earnings late next month, it will substantially narrow the gap with its rival. Analysts expect the leading streaming platform provider to end fiscal 2019 with some 35.8 million active accounts, and reach perhaps as many as 44 million at the end of fiscal 2020.
While Amazon will undoubtedly add more accounts to pad its lead, Roku has been growing its base far faster than Amazon has, and with the number of smart TVs it's selling, as well as the expansion of its platform's universe into new corners, it's quite possible we'll soon see Roku surpass Amazon for the lead here.
|
Q318 |
Q418 |
Q119 |
Q219 |
Q319 |
|
|---|---|---|---|---|---|
|
Roku active accounts (millions) |
23.8 |
27.1 |
29.1 |
30.5 |
32.3 |
Data source: Roku Q3 earnings report.
Furthermore, the fourth quarter tends to be Roku's best quarter for adding new accounts, with last year showing 14% sequential growth. A similar growth rate this year would put Roku near 37 million active accounts.
Last quarter, it grew its customer base by 36%, which, if carried over to the fourth quarter, would also come in near 37 million accounts. It's quite possible Wall Street is underestimating what Roku could achieve in the current quarter.
Ready to turn the trajectory up
It should also be remembered that Amazon's active users total comes from it being present in more than 100 countries around the world. Roku, in contrast, is available in just 20. As Roku continues to grow and branch out into more markets, we should see its active accounts growth accelerate, but based on its current market representation, it could be argued Roku is the real leader here.
Roku also took the opportunity at CES to announce it was greatly expanding the number of manufacturers for its Roku TV to 15 in North America and Europe. It says the roster of brands for its TVs in 2020 will include ATVIO, Element, Hisense, Hitachi, InFocus, JVC, Magnavox, onn, Philips, Polaroid, RCA, Sanyo, Sharp, TCL, and Westinghouse, with TCL and Hisense announcing they will further broaden the number of models they offer.
It also announced a new program called Roku TV Ready in which consumer electronics manufacturers can display a badge on their devices that says "Roku TV Ready," meaning they have been tested and certified to work with Roku TV.
Amazon, of course, was not without its own announcements to expand its Fire TV universe. It said it was expanding its Fire TV Edition program to new devices including soundbars, more smart TVs, and even cars. It plans to have more than 50 Fire TVs and soundbars in upward of 10 countries, with plans to expand that to 150 models by the end of 2020.
Roku is the real winner
It's clear neither tech giant is willing to cede ground to the other, and as the battle for eyeballs progresses, the two will be continuously growing the opportunity to capture more accounts to expand their bases. Yet despite Amazon.com clearly having the lead at the moment, it's not quite as big as it first appears. Roku will likely be narrowing that lead in the near future – and possibly soon sprinting past it.
