Roku says it will start building its own televisions

Company Roku (ROKU) announced at CES 2023 in Las Vegas on Wednesday that it will begin selling TVs it designed and built in-house. The streaming giant currently offers Roku-branded TVs through third-party partners including TCL, Hisense and Philips. The change means that Roku will control all aspects of the television production process itself, rather than relying on these third parties.

The company will offer 11 models ranging in size from 24 to 75 inches and priced from $119 to $999.

“Over the past 20 years, Roku has played a pivotal role in what is now the mainstream to enjoy a great TV series, classic movie or live sports,” Roku Devices CEO Mustafa Ozgen said in a statement.

Roku announced it was making its own TVs at CES 2023. (Image: Roku)

Roku announced it was making its own TVs at CES 2023. (Image: Roku)

“Our goal is to continue creating an even better TV experience for everyone. These Roku TVs will not only complement our existing range of partner brand Roku TV models, but will also enable us to drive future Smart TV innovations. The streaming revolution has only just begun.”

According to Roku, its own TVs will go on sale in the US this spring and, like the models from other companies, will run on Roku’s proprietary operating system. All sets will come with Roku Voice Remotes, Find My Remote and Private Listening modes.

In addition to making its own TVs, Roku has also announced a new OLED TV reference design for third-party Roku TV partners. The reference design aims to bring OLED picture quality to a wider audience, which provides more vivid colors and deeper blacks.

Roku’s deeper moves into the hardware space come as the company struggles with poor ad sales amid a downturn in the broader digital advertising market. While Roku sells hardware such as streaming devices and televisions, the vast majority of its revenue comes from the platform’s business, which consists of ad sales.

In the third quarter of 2022, Roku’s platform business generated $670 million of $761 million in total revenue. Equipment sales brought in just $91 million.

But this reliance on advertising has hurt Roku in recent quarters. In the second quarter, the company missed Wall Street’s revenue and earnings per share estimates, blaming supply chain collapse and fears of falling advertising spending.

And while the company met analysts’ expectations in the third quarter, its forecasts for the fourth quarter were well below expectations, which is a worrying sign given that the fourth quarter should be its strongest quarter.

These issues affected Roku’s stock price for the entire last year, causing the streaming giant’s stock to drop more than 80% in the last 12 months.

The company will now need to ensure its recent investments in hardware pay off in either better hardware revenue or better ad sales by putting more sets in front of more consumers. Wall Street will just have to wait and see.

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