Roku grew its streaming reach and engagement in the first quarter of 2024 and executives on Thursday’s earnings call zeroed in on the home screen as one of three key areas to help its broader business priority of reaccelerating platform revenue growth.
Roku ended Q1 with 81.6 million streaming households globally, including 1.6 million sequential net adds in the quarter, driven by both smart TVs and streaming players.
In Q1 Roku’s platform business, which includes advertising as well as streaming service distribution, generated $755 million in revenue, up 19% year over year.
On Thursday’s earnings call executives expressed confidence in Roku’s ability to accelerate platform growth in 2025 and beyond, as well as Adjusted EBITDA and free cash flow. Roku CEO Anthony Wood called out the following three areas of increased focus to do so: better monetization of the home screen, growing Roku-billed subscriptions (including via Roku Pay) and expanding programmatic ad capabilities.
Home screen
Roku’s home screen is the first thing that viewers see when they turn on their device, reaching U.S. households with nearly 120 million people every day in Q1.
“The significant reach creates a lot of opportunity,” Wood said in opening remarks. “I see many ways to improve the user experience while also growing monetization for Roku.”
With that entry point into the viewing experience, Wood noted the Roku user interface is where viewers land before they pick what to watch – meaning opportunities to serve advertising and promotions before TV watching even starts, and even if they wind up on an app that doesn’t have commercials.
“We have the ability to reach everyone on the platform…not just the viewers that select apps with advertising,” he added.
In Q1 streaming hours originating from the Roku home screen menu more than doubled year over year.
New types of ad units are one way Roku’s looking to boost monetization of the home screen. One of the first changes, according to Wood, will be to Roku’s premiere ad unit it calls the marquee video ad. Traditionally it’s been a static ad, but Roku plans to start enabling video - marking the first video-enabled ad unit added to the home screen.
It’s one way the company is looking to utilize untapped home screen potential, where Wood predicted the introduction of video-enabled units will “be very popular with advertisers.”
Roku is also “testing other types of video ad units, looking at other experiences” it can add to the homes screen to integrate more video advertising.
And the chief executive pointed to home screen experiences, such as the recently launched NBA Zone within its Sports Experience, which he said helps promote AVOD and SVOD content to users and integrate advertising in the experience. For example, the NBA Zone includes the NBA app, the league’s live out-of-market subscription service NBA League Pass (available to buy with Roku Pay), as well as the first-ever NBA FAST channel.
In another example, he noted the recent addition of a personalized content row that for the first time surfaces recommendations – partially AI-driven and pulled from across services on the platform – directly on the home screen.
“There’s lots of ways we’re working on enhancing the home screen to make it more valuable to viewers but also increase the monetization,” Wood said.
Long-term, he said Roku plans to build more types of experiences, like the Sports Experience, that are both useful to viewers to use them to integrate advertising, promotion and sponsorship opportunities.
Roku-billed subscriptions
Roku also generates revenue from selling subscriptions to partners’ services, and is looking to build that out further, including through its payment and billing service Roku Pay.
On the subscription front, Wood said the company reorganized its internal various separate subscription teams into one, which now reports to the chief executives, and reallocated more resources to the segment.
The company hasn’t disclosed how many people use Roku Pay but executives noted it’s the primary way the platform drives signups for subscription partners.But Wood Roku sees opportunity for the mechanism to be even more popular.
Roku Pay has benefits for consumers in that they can sign up for subscription services in a more frictionless way, while helping subscription partners attract and retain subscribers without losing them through a complicated the signup process. And executives cited greater integration of SVOD content throughout the Roku platform, including through the previously mentioned home screen recommendations row, as helping adoption of Roku Pay in terms of pulling up content people might be interested in that they can then directly subscribe to without having to enter billing information.
Still, there are ways to enhance Roku Pay, executives said.
“Also technicalities of running a large scale billing platform, things like passive cancellations,” Wood said, where someone might cancel because their payment method got declined, for example. “There’s a lot of operational focus on improving the numbers in Roku Pay…it’s a big business and there’s still lots of opportunities to improve it.”
Expanding programmatic
As Roku aims to better monetize that also means making things easier for advertisers.
Wood called out a recent switch in the programmatic strategy to be more focused on expanding relationships with third-party platforms, including DSPs to expand what Roku can offer to advertisers.
Playing into that is The Roku Channel, which in the first quarter became the number three app on the platform, behind only Netflix and YouTube. Engagement on the Roku Channel was also up 66% year over year.
And Wood cited a lot of opportunity to “close the gap in engagement in the Roku Channel and the fill rates in the Roku Channel” and “programmatic ad capabilities are one of the ways we intend to do that.”
Charlie Collier, President of Roku Media, noted several changes, including now counting more than 30 third-party partners, with a focus on flexibility for advertisers. The strategic pivot, he said, “has been paying real dividends” including in Q1 where it saw an increase in programmatic ad spend as a percentage of total video investment on the Roku platform.
Roku in Q1 saw streaming hours grow to 30.8 billion, up 5.7 billion hours year over year. Net revenue totaled $881.5 million, including $126.5 million in device revenue. Roku reported an operating loss of $72 million and Adjusted EBITDA of $40.9 million.