Roku says it will start making its own TVs

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

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

“Over the past 20 years, Roku has been instrumental in making it the mainstream way to enjoy a great TV show, classic movie or live sport,” said Roku head of devices, Mustafa Ozgen, in a statement.

Roku has announced that it will make its own TVs at CES 2023.  (Image: Roku)

Roku has announced that it will make its own TVs at CES 2023. (Image: Roku)

“Our goal is to continue to create an even better TV experience for everyone. These Roku-branded TVs will not only complement existing co-branded Roku TV models, but also allow us to enable future smart TV innovations. The streaming revolution has just begun.”

According to Roku, first-party TVs will go on sale in the US this spring and will run on Roku’s proprietary operating system, just like third-party models. All sets come with Roku voice remotes, Find My Remote, and Private Listening modes.

In addition to manufacturing its own TVs, Roku also announced the new OLED TV reference design for third-party Roku TV partners. The reference design aims to bring OLED image quality to a wider audience, providing more vibrant colors and deeper blacks.

Roku’s deeper moves into the hardware space came as the company grappled with weak ad sales amid the downturn in the broader digital advertising market. While Roku sells hardware like streaming devices and TVs, the majority of its revenue comes from its Platform business, which consists of ad sales.

In Q3 2022, Roku’s Platform business generated $670 million of total revenue of $761 million. Hardware sales brought in just $91 million.

But that 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 distress and fears of falling advertising spending.

And while the company met analysts’ expectations in the third quarter, Q4 guidance was well below expectations, a disturbing sign considering what should have been the strongest quarter of Q4.

These issues weighed on Roku’s stock price over the past year, causing shares of the streaming giant to drop more than 80% in the past 12 months.

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

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