Roku has done well since IPO. As of September 2018 the stock is trading at 2 - 3 times its original price and the reason is fairly simple. Roku had a very large user base before its IPO and is controlling at least half of the devices for sale in the streaming set top box market. Roku has proven to their investors that they are profitable by adding advertisements to their platform.
Unfortunately for Roku there is serious risk in their future. That risk comes from three companies named Apple, Amazon, and Google. All three of them are competitors to Roku with Apple and Amazon becoming more serious competition fast. If Google decides to push its Android TV platform over its Chromecast platform they could easily be just as competitive. And that is Roku’s biggest problem. Their competition can compete with Roku as much as they want to. Their competitors have immense brand recognition and have enough money to burn in any way they feel like it. Roku does not have this kind of cash. In my opinion they also don't have the brand recognition. Sure, we all relate the go to set top box to watch Netflix on as the Roku. But most users are becoming more and more aware of Rokus competitors. Its competitors have brand recognition that is something that is almost impossible to compete with. Google and search and its portfolio of Google services. Amazon and its giant ecommerce store. Apple’s brand loyalty and recognition doesn't even need to be mentioned it's so powerful. Do people share the same recognition and loyalty to Roku as they do these other juggernaut companies? In my opinion no and when end users learn that Roku’s competition has better options I don't think people will bat and eye to drop their Roku.
You might now be wondering why I think Roku won't be able to continue to offer as good of a product as the competition. What can’t Roku do that the others do or will that will drive people to leave Roku? There are a few big reasons for this but one of the largest ones is Artificial Intelligence which many current day consumes can relate to as personal assistants. It's not hard to figure out who I am talking about when I mention personal assistants with Roku’s competition. The names are used in many of a our day to day lives now. I am referring to Google Assistant, Siri and of course Alexa. Apple’s usage of Siri on it’s iPhones have made their personal assistant very popular. The usage of Google Assistant on Android smartphones and Google Homes have made Google very popular in households. Lastly, Amazon created the home AI market with their Echo devices which house Alexa. The problem for Roku is people are getting more and more used to these assistants and all three of them work with their respective Smart TV operating systems. I can talk to these assistants and have them find me tv shows, show me the weather and even use them to do shopping on my TV. Even simple commands like turning the TV off and on go a long way. The only way to have a successful voice assistant is with years of user data, piles of cash and plenty of users. Roku only has users and the only data they have on them is for TV usage. Fact is Roku will never be able to offer this level of integration that their competition will and is already.
As a TV operation system app developer I also get to see where Roku is behind from an app development standpoint. Yes it is easy to get a simple streaming app up and running but we are starting to do more and more with our TVs. There are much more interactive apps and neater guides to find content on. It is almost impossible for Roku to keep up with the same user experience as its competitors. Writing TV apps for Apple and Android is very normalized and capable. Building anything comparatively fancy on a Roku device is almost impossible and the experience for the end user is very noticable. You will see this in popular apps like Playstation Vue or DirecTV Now. Their guides and apps are just sluggish and more clunky compared to their Apple TV, Fire TV or Android TV counterparts. I hope Roku is using its investor money to improve the experience of writing apps for their platform but I fear it may be too little too late. Especially considering Roku uses a proprietary programming language that is very uncommon unlike the popular languages its competitors use.
Exclusives are also a problem for Roku. We are also seeing Apple, Google and Amazon get into creating its own content. Besides Google with their YouTube TV I don’t see Amazon and Apple sharing their content with Roku in the future. Content is kind and as soon as they start having Netflix or HBO calibur shows that are only available on their platforms people will see less and less reasons to pick up a Roku. Amazon is also using its leverage to force the largest brick and mortar retail store (Best Buy) to start installing Amazons smart TV OS in Best Buy branded Insignia TVs. In return Amazon is selling products for Best Buy on Amazon.com.
Now, I would love to say buy Roku now but be careful of holding the stock long term but that doesn't seem to be how investing works these days. Take Fitbit for example. The stock is trading for almost 5 times less than its all time and short lived high. Fitbit was putting up great numbers but no matter what their earnings reports showed investors just couldn't stop thinking about Apple’s Watch. The Apple Watch which wasn't even selling near the levels it is today just continued to drive Fitibit stock into the ground where it has stayed since 2016.
Hopefully I am wrong and Roku continues to flourish. Competition in the streaming industry is a great thing just like any other industry. Unfortunately, next time I ask myself if I want to purchase Roku stock I am going to stay as far away as possible.