The so-called ‘streaming wars’ started off in November last year when Apple TV + and Disney Plus were launched to take on the unrelenting dominance of Netflix Inc (NASDAQ:NFLX). While it is still not clear which one of those companies is going to emerge as the winner, streaming device maker Roku Inc (NASDAQ:ROKU) has emerged as the early winner in the industry.
Roku announced its financial results for the fourth quarter recently, and an analysis of the report throws up a lot of interesting details about Roku’s direction. Firstly, the company grew its revenues by 49% to hit $411 million and also beat analysts’ estimate of $392 million comfortably.
However, that is not all. The company added as many as 4.6 million new accounts in the fourth quarter and generated year on year growth of as much as 36%. While these are highly promising improvements in key metrics, the company also reported that users also spent more time on Roku platforms.
The figure stood at 317 hours for the quarter, which reflects a significant jump from the 269 hours recorded in the year-ago period. The higher engagement from users is good news for Roku as it will help the company’s advertising business.
As the number of streaming platforms rises, Roku is fast emerging as a platform that can be used to switch easily between different services. For instance, Disney Plus paid Roku to ensure that the launch of its show House of Mouse was prominently visible on the home screen. Such revenues should continue to rise if the Roku can keep boosting engagement. Roku offers investors an option to back a company that could be the most likely benefactor from the explosion of services in the streaming space.
More launches are coming up in 2020, and that is going to boost Roku’s importance in the streaming space further. Moreover, the company is currently operating in the United States only, but if it expands internationally in a meaningful way, then the growth prospects could prove to be positive.