Take a look at your Roku remote. See those dedicated quick launch buttons for services like Netflix,Movies Hulu, and Sling? Did you ever wonder how Roku chooses which companies are on there?
The answer: those streaming services pay for their own dedicated space on your remote, and they pay Roku $1 per customer for each of those buttons.
So, for example, every Roku remote sold with four of those dedicated buttons on it nets the company an additional $4 on top of whatever each customer paid for it.
A recent report by Bloombergtakes a look into the streaming battle over your living room. With set-top boxes from Amazon, Apple, and Google dominating the market in recent years, Roku still maintains the lead with 44 percent of streaming TV viewing time happening on one of its devices, according to video analytics firm Conviva.
However, the oldest streaming box company in the field is fighting to stay relevant. To maintain market dominance and grow its user base, Roku sells its devices for cheap, making hardware sales a low-profit venture.
With around 30 million active users, how does Roku further monetize its customers? Through advertising, of course!
Along with the dedicated button ad space, Roku earns $1 million for every home screen takeover. As industry outlet Cord Cutters Newspoints out, Disney+’s recent multi-day home screen takeover netted Roku millions in ad dollars.
In addition, Roku takes a cut from advertising sales on channels run by other media companies on Roku’s platform. Unlike cable, Roku doesn’t pay to distribute the channels. The company also runs a free, ad-supported platform called The Roku Channel, which is availableeven if you don’t own a Roku device.
On top of all that, Roku also receives a cut from every Netflix or other streaming service subscription that’s made on its devices.
In short? Roku sells its devices for so cheap because you’re worth way more to it than the $30 you paid for that Roku Express. That's certainly something to chew on.
Topics Netflix
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