Sheltering at home benefits Roku
Roku released early guidance prior to the company’s upcoming earnings call. The highlight was growth in worldwide active accounts which have reached 39.8m as of March 31. The company expects Q1 streaming hours will total 13.2 billion, a 49% year-over-year increase. While that is a smaller increase than reported in Q4, Roku noted that during the first quarter it rolled out its “Are you still watching?” feature. This exits video playback after long periods of inactivity and as such reduces overall streaming time. More topical, Roku said, when COVID-19 quarantines took effect in March, it resulted in an “acceleration in new account growth and an increase in viewing.” This is right in line with the rapid player sales growth that we saw at the same point in time. Regardless, the company is revising its full year 2020 financial guidance due to the uncertainty around the impact of the COVID-19 pandemic.
The NPD Take:
- While streaming entertainment has been a bright spot during the pandemic, it remains to be seen how longer term retail closures will impact hardware sales after the initial rush to connect TVs.
- The ad-revenue impact is likely more unknown. While Roku offers targeted and measureable TV ads, an unknown number of brands facing economic uncertainty will pause or reduce investments. That could impact Roku’s 2020 performance as the company has increased in reliance on advertising and services revenues.
HBO Max coming to Charter
While HBO Max is built to develop a streaming audience, a large part of the strategy is to cut over linear pay TV users. This is evident in the company’s deal with Charter that will give HBO Max access to all of Spectrum’s existing HBO subscribers. The company will also offer HBO Max on a multitude of platforms for purchase through their video, broadband and mobile services. This builds on Warner Media’s strategy of developing distribution partners. The first deal announced was with YouTube TV, which will carry the service as an add-on to its main bundle.
The NPD Take:
- Cable and Satellite TV operators are migrating from being linear video distributors to streaming video distributors. Does a time come where the middle man is no longer needed?
- The market for streaming video services is about to get extremely crowded at a time where consumers value entertainment more than ever, yet have less disposable income. Garnering new subscribers at $15 per month will be challenging in this environment without attractive bundles and promotions.
Quibi casting to a TV near you
Citing early customer complaints, Quibi announced they will be building cast capability for connected TVs. However, development could take upwards of six months which is a fairly typical timeframe. Unfortunately for the company that will mean losing access to the current frenzy of streaming TV viewership generated from the COVID-19 crisis. It seems remiss that it took customer feedback to identify that the viewers want to watch TV on TV. While the data shows consistent growth in mobile video streaming, it also consistently shows the majority of viewer’s watch TV on TVs.
The NPD Take:
- Better late than never. But there is now the risk that viewers plow through short form programming on TV since viewing sessions are much longer. Content will also be in short supply as studios cut production due to stay-at-home orders. This will compound the challenge.
- The company is said to be building casting capabilities. That fits with the younger mobile first audience but as Google learned with Chromecast, it will limit the audience as the 35+ age segment is less likely to cast programming.