Roku Has a Problem — Its Buttons Don’t Print Enough Money

No, you suddenly forgot to read: Roku, the streaming box and services company, is concerned about how much money its buttons are bringing in. Not because it suddenly started making clicky actuators for other companies to include in their products (what would be a pivot), but because Roku is really just an advertising company in the dreamer’s clothing. And it has a whole lot of prime real estate for selling streaming services: For a fee, it’ll affix their logo to the buttons customers will see every time they use Roku. Even better, those buttons would be Only Launch that service.

Basically, Roku’s best ROI may be the Netflix-red and Disney-blue paint that its suppliers buy.

At the bottom of each Roku remote, you’ll see four buttons labeled with different streaming services — currently, Roku’s website shows Netflix, Disney Plus, Apple TV Plus, and Paramount Plus. That’s a full stack of pluses, though buttons change over time as new streaming services are born, die, or make different decisions about where to spend their advertising budget. (I love to imagine that someone once got the worst remote ever, featuring buttons only for streaming services they never use like Sling, Rdio, PlayStation Vue, and Kobo. Points if you guess.) Can guess which one of them is made without Googling.)

Sorry if you want buttons that everyone will use.
Image: Roku

Roku certainly isn’t the only company that relies on “button revenue,” but it really pushes these buttons hard; These shortcuts are literally made on its simple remote one fourth Of all the buttons, even if you’re too generous and count the D-pad as four separate inputs. When you move up to its Voice Remote or Voice Remote Pro, that ratio doesn’t change that much. It’s easy to see why Roku makes the buttons so prominent; in 2019 bloomberg reported that streaming services paid about $1 per subscriber to put their button on the remote. If that number is still accurate, it means Roku could earn up to $4 per remote, just from the streaming service fee. Multiply that with most of the 63 million active accounts Roku reported in its Q2 2022 earnings (PDF), and that’s a big part of the change.

If you’re a Roku, it’s a stroke of genius; Every time you sell a remote, you get paid from the person who bought it And From four streaming services. It’s also smart to limit it to four slots on most models – last time I checked, there were far more streaming services that would love to have a button on the Roku’s remote. If I learned one thing from my economics classes (known as the great GPU scaling wars of ’20 and ’21), low supply and high demand equals cash in the bank. Roku can basically print money, as long as it keeps selling the device and remote, and convince advertisers to pay the same amount for its special buttons.

Yes, about that. In its second-quarter earnings call last week, the company said it had to adjust its forecasts because people Not there How many Roku devices are you buying? According to the company’s CFO, the decline in player sales is the main reason it affects its forecasts “there will be a lower expectation of button revenue in some deals where we’ve sold those deep link buttons on remotes.”

To break it down: Roku didn’t change its financial assumptions just because it wasn’t selling as many streaming boxes, or because fewer boxes meant a smaller audience it could sell to advertisers. According to Roku, the “most obvious” consequence of those fewer sales is that its button profits are dwindling.

Of course, it’s not the only consumers who are hesitant to throw money at things. Roku’s too very Worried about advertisers tightening their purse strings, warning shareholders that the current economy could dent advertising budgets just as the pandemic began. (Reassure!) This almost certainly includes budgeting some streaming services, which can drive down the price of Roku’s buttons if they’re not willing to bid high for the real estate on your remote.

Sure, you may be able to ignore these buttons (or live in constant mild frustration that you can’t remap them to a service you actually use). But streaming services have generally been under the impression that paying Roku for button placement can help them get enough customers to make it worthwhile, and Roku has now revealed that these button assumptions are its bottom line. How important are . If you’ve ever wanted an example of how valuable your attention is, Roku’s buttons might just put one at your fingertips.

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