Roku Advertising
Roku sells streaming sticks for $29 that cost $28 to make, deliberately losing money on hardware. Every plugged-in device generates $7 of ad revenue over its lifetime. The device is the hook. Advertising is the business.
Roku sells streaming devices at cost. A Roku stick costs $29 at retail and costs $28 to make. The company deliberately loses money on every device sold. The profit comes after the device is plugged in. Every time a user watches content, Roku shows advertisements and collects viewing data. The device is the hook. The advertising is the business. Roku had over 80 million active accounts in 2023. Platform revenue, primarily advertising, reached $2.7 billion. The device segment generated $400 million at near zero margin. The platform operated at over 50% gross margin. For every dollar of hardware sold at break even, Roku generated $7 of platform revenue over the device lifetime. The model mirrors cable economics inverted.
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