Roku Is Having Success Driving Engagement and Monetizing Its Platform as It Looks to Build a Moat

Roku provides the most-used streaming operating system in the US through the streaming devices and televisions that it manufactures or licenses its name and software to. Roku’s strategy is to remain a leading provider of streaming devices by maintaining low prices and accepting losses in its devices segment. It intends to then drive profits from Roku user accounts. We have been skeptical that this is a viable strategy, because we don’t see competitive advantages to drive users to Roku, leaving the firm to sell devices at steep losses to attract customers. However, the firm has now built up a sizable user base and is moving toward GAAP profitability.