Roku Gets $60 Million Investment to Build the Ultimate Smart TV

Roku_LT_FamilyRoku just got a $60 million shot in the arm, and it’s going to use it to do something very important – stay relevant.

The $60 million investment, which is coming mostly from News Corp and British Sky Broadcasting, along with smaller investments from Hearst Corp and an unnamed source (wonderful company to keep, right?). Roku’s CEO, Anthony Wood, has suggested that Roku will use the money to strengthen those strategic alliances and make itself more necessary when it comes to smart TVs.

Currently, it’s probably safe to say that Roku’s set-top boxes are not a sustainable revenue stream – a box that makes TVs Internet-friendly is going to become pretty worthless once every TV starts coming out of the box Internet-friendly. That’s not going to happen overnight, but it’s in the process of happening, and there will come a day when the term smart TV is rendered unnecessary, by virtue of every TV being smart. When that day comes, Roku is going to need to be doing something else.

That something else sounds a little like becoming a cable company of the Internet. Just as cable companies package channels and send them to your TV, Roku wants to come pre-installed on smart TVs, and equipped with the ability to supply you with Internet channels to easily switch between and browse. That might not be a huge deal for “channels” like Netflix and Hulu, which can get by just fine with their own apps, but Roku is probably banking on smaller, up-and-coming channels looking for the kind of publicity and distribution that Roku can offer.

In fact, that’s what Roku is already doing – they charge a fee to channel providers for Roku to promote their content. The other major source of Roku revenue that doesn’t rely on set-top boxes is movie rentals and purchases. Roku gets a cut of all sales if the transaction is performed using their service.

Roku’s long-term position still looks a little tenuous – it’s hard to argue that Roku is necessary, but it seems likely the company can succeed in doing what most successful companies do – take an unnecessary service, and make it seem necessary. If it can keep up content deals with smaller channel providers, and get its software loaded into as many televisions as possible, it seems like the company could position itself well for the future.


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