Bloomberg News

Roku Steps Up Apple Competition With Movie Store, Hardware (1)

September 25, 2013

Roku Steps Up Apple Competition With New Movie Store, Hardware

The Roku 1, Roku 2 and Roku LT television streaming players and remote controls are arranged for a photograph in Los Angeles. Photographer: Patrick T. Fallon/Bloomberg

Roku Inc. the maker of set-top boxes that connect TVs to the Internet, introduced new and upgraded devices that make it easier for viewers to rent or buy movies online.

The boxes provide access to an online store called M-GO, letting consumers use a single sign-up and log-in to order films and TV shows from different studios, Saratoga, California-based Roku said today in a statement. Roku will also collect a cut of the sales.

The company is adding features and content to stay ahead of Apple Inc. (AAPL:US), its nearest competitor. The company also vies with game consoles from Sony Corp. and Microsoft Corp. and, more recently, with Google Inc., which began selling its $35 Chromecast streaming device that connects TVs to YouTube and other video services.

Roku makes the most popular streaming products used by consumers to watch films and TV shows from subscription services such as Netflix Inc. (NFLX:US), according to researcher Parks Associates. With M-GO, Roku is offering sales and rentals as well.

“We want to give our viewers a one-click access to anything that’s available,” Anthony Wood, Roku’s chief executive officer, said in an interview. Roku will get a cut of video download revenue, as it does with other partners, according to the company.

Market Share

Roku, which has sold more than 5 million boxes in the U.S., makes four models that retail for $50 to $100. It has 37 percent of the market for such devices, according to Parks Associates, compared with 24 percent for Cupertino, California-based Apple and its Apple TV product, priced at $99.

“Roku users spend more time streaming content than owners of other streaming boxes or video-game consoles,” Wood said.

The new devices feature an updated remote that delivers one-press access to Netflix, the largest subscription streaming service, the Instant Video service from online retailer Amazon.com Inc. (AMZN:US), Blockbuster on Demand and M-GO. The companies are paying Roku for the placement, Wood said.

M-GO is jointly owned by Technicolor SA (TCH), the majority investor, and DreamWorks Animation SKG Inc. (DWA:US), the studio run by CEO Jeffrey Katzenberg.

Movies and shows from seven studios are available from M-GO the same day that DVDs and Blu-ray discs go on sale and can be watched on a variety of devices. “World War Z” in high definition can be rented for $4.99 for 24 hours or purchased for $22.99, according to M-GO’s website. Last season episodes of ABC’s “Modern Family” may be purchased for $1.99 each.

Purchases are stored online and can be watched an unlimited number of times through the Roku player. With the new products, Roku will also provide access to films that aren’t in M-GO’s library.

To contact the reporters on this story: Cliff Edwards in San Francisco at cedwards28@bloomberg.net; Andy Fixmer in Los Angeles at afixmer@bloomberg.net

To contact the editor responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net


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  • AAPL
    (Apple Inc)
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    • 2.78
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  • NFLX
    (Netflix Inc)
    • $431.89 USD
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