We're spending a lot of time in front of our TVs these days, but we're not watching the boob tube the way our parents did. We're surfing through growing vaults of digital content -- on our terms. It may be nostalgic to think about the days when everyone huddled around the same three or four networks to catch a hit weekly show that we would all dissect the next day, but now, that sandbox has expanded into a playground that we can all enjoy whenever and however we want.
The streaming-video revolution has grown up in a hurry lately, but even now we're seeing some companies carving out new paths of disruption. fuboTV (FUBO -2.14%), Roku (ROKU -1.90%), and Vizio (VZIO 0.66%) are changing the way the game is played. Investors and viewers alike will profit by the changes.
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1. fuboTV
Live-TV streaming services emerged a few years ago as an alternative to traditional cable and satellite television. Offering dozens, if not well over a hundred, different live channels that cord-cutters know from their former cable and satellite-TV subscriptions, these cloud-based platforms have proven superior with their flexible offerings, next-gen interfaces, and easy access to cloud-based recordings of shows viewers can't catch in real time.
Even in a disruptive industry like live TV, there's already a disruptor. fuboTV emerged with a "sports first" mantra that puts live sporting events front and center. It carries most of the non-sports networks that mainstream audiences crave, but it also streams more than three dozen sports channels featuring sports around the clock and around the world.
Viewers are flocking to fuboTV, and revenue growth is accelerating. We've seen year-over-year top-line growth go from 71% in the third quarter of last year -- its first report as a public company -- to 196% in its latest financial update.
fuboTV is making a lot of money between the premium subscriptions and growing ad revenue, with average revenue per user (ARPU) up 30% over the past year to $71.43 a month. Its user base has more than doubled, rising 138% year over year to 681,721 engaged accounts.
All of this may seem only mildly disruptive, but there's an ace card up fuboTV's sleeve. Sports fans generally love to make real or friendly wagers on live events, and fuboTV is starting to cash in the betting boom. This summer, it rolled out free predictive on-screen games, where viewers can win cash prizes if they beat fellow viewers in forecasting in-game events and results.
A proprietary live-stats platform is also now an option. The real treat comes later this month when fuboTV expects to roll out a sportsbook app where viewers can place wagers on the live events that they're watching. Naturally, there are regulatory hurdles about rolling out the feature across the country, but fuboTV is already gaining headway in enough key states to be a needle mover out of the box.
2. Roku
Roku has emerged as the top dog among streaming hubs. Its dongles sell for as little as $20 to $30, giving anyone the ability to smarten up their dumb TVs. Roku's agnosticism -- it carries thousands of streaming-service apps -- makes it a popular choice for third-party smart-TV manufacturers. Roku's operating system is the default hub in 38% of the smart TVs being shipped in this country.
Consumers trust Roku. It powers 55.1 million active accounts, a 28% increase over the past year. Revenue is growing roughly three times faster, as average revenue per user keeps climbing for the free ad-supported platform. Roku has been a disruptor among disruptors, but it's also not afraid to upend its own business.
One of the more exciting things to happen at Roku this year is that it's been acquiring original content and old shows. Its biggest score was the abandoned Quibi catalog of star-studded short-form shows and films that died when that service bellyflopped.
Quibi didn't fail because it lacked content. It had an odd business model that limited viewership to mobile devices until it was too late. Roku now has a growing chunk of proprietary content that will keep viewers loyal and engaged. Ad revenue per user should continue moving skyward from here.
3. Vizio
Finally, we can wrap things up with the one smart-TV manufacturer that seems to get it. Smart-TV makers that tried to roll out their homegrown streaming hubs failed with consumers because the interfaces were clunky and needed perpetual updating. There's a reason why many folks with TVs that come with streaming operating systems still go out of the way to plug a Roku dongle -- or any rival dongle -- into an HDMI input to upgrade their viewing experience.
Vizio is hoping to change that with its SmartCast streaming platform. SmartCast revenue soared 133% for Vizio last year, and while it accounted for just 7% of the top-line mix in 2020, it was enough to boost the 7% increase in TV sales to 11% in total revenue growth.
Just as we saw Roku's platform revenue become a larger contributor than its lower margin hardware business, Vizio's doing a lot of things right with SmartCast. It's now up to 16% of the revenue mix and helping move the needle more and more with every passing quarter.
There are now 14 million active SmartCast accounts, 43% more than the company was serving a year earlier. ARPU has soared 90% over the past year, and Vizio is drawing more attention from advertisers hungry to reach its captive audience.
We're at the point where net revenue was positive in the company's latest quarter despite a 9% decline in device sales. Platform gross profit has now overtaken the gross profit from its device sales. So, yes, even a smart-TV manufacturers can be disruptive.
There are plenty of streaming-service stocks changing the way the game is played -- and winning in the process.
