Roku Remains ‘Very Committed’ to Set-Top Boxes Even as Smart TVs Spread

Roku Inc. said the company remains “very committed” to its namesake set-top boxes, even as the electronics industry shifts to smart televisions with built-in streaming technology.

Mustafa Ozgen, president of devices at the company, said he sees a “ton of opportunities” for the technology, describing the category as a long-term play. Ozgen made the remarks as the company unveiled a faster version of its $99 Roku Ultra box with an upgraded remote control.

Roku built its brand around set-top boxes — devices that plug into existing TVs and add the company’s interface and apps — but the industry has shifted to TVs that run the software directly. Roku itself has been part of this transition: The company sells its own TVs, and its technology is integrated into other models.

Ozgen acknowledged that TVs are now “slightly higher” unit sellers than the external devices, known as players. But the latter category is still a “particularly strong seller” in the US, he said.

Roku generated $491 million last year from devices — including TVs and players — but does not break out specific numbers for each category. The company’s biggest revenue driver is its platform and programming content, which generated almost $3 billion in 2023.

Ozgen said Roku players are still important for people with older TVs who want to add a newer experience, and they outsell competitors’ devices. Still, the company’s content business, which includes revenue sharing from streaming services and advertising sales, is its real moneymaker.

The devices’ segment has a negative gross margin, contributing to losses at the San Jose, California-based company. A disappointing financial outlook pummeled Roku’s stock in February, though the shares have begun to rebound in recent months. They remain down 19% in 2024.

The new Roku Ultra player adds the Wi-Fi 6 standard for better connectivity, an upgrade over Wi-Fi 5. Ozgen said that other improvements are coming to its players in the future, though support for 8K resolution is still “several years away,” given the limited amount of programming available. And while some users have begun watching TV in virtual reality, Ozgen said Roku has no current plans to get into that space.

Competitors are making their own moves. In August, Alphabet Inc.’s Google introduced a new TV Streamer, a revamped set-top box built around AI. Apple Inc., meanwhile, hasn’t updated its device since 2022, when it cut the price and added a faster processor. But Apple recently updated the software on its box, adding improvements to FaceTime and other features.