This is Hamamoto from TIMEWELL
This is Hamamoto from TIMEWELL.
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Good Evening
Good evening. This is Ryu from ONE X. Today I want to take a look at ROKU, which provides streaming dongles. The CEO is Anthony Wood — an American with English roots who apparently served as president and CEO of Replay TV. I wonder if he wanted to digitally transform the TV industry. ROKU's business is often described as disrupting cable TV. If I were to diagram it, it might look something like this.
The platform that had long been dominated by the TV industry
is the concept they have disrupted up until now. Netflix, Disney+, and others are not competitors but collaborative partners. It's what you might call a ribbon model (roughly, a platform business), similar to Recruit's model. Users pay nothing, and it's funded by content-providing companies that pay advertising fees. Google operates a similar business model — users don't pay for the search engine, but advertisers fund the business. In the cable TV era, targeted advertising was impossible, but internet connectivity now makes it possible to display ads tailored to each individual. ROKU has essentially applied to the TV industry what has already happened in the internet industry. The ones being disrupted are the cable TV companies that used to charge users $75 a month — but TV broadcasters providing content seem to be getting on board with the ROKU platform. As this trend accelerates, cable TV will certainly disappear.
Their Strength Lies Not Just in America
Their strength lies not just in America — they're running the same kind of business in the UK and Brazil as well, expanding globally. Since the TAM (roughly, the maximum market size ROKU can capture) extends globally, the day when ROKU content can be watched around the world may not be far off. Will it be only a matter of time before they land in Japan?
By the way, the most recent user count was reportedly 50 million. Disney+ has 120 million and Netflix 170 million, so there's still plenty of potential to scale. The ROKU dongle itself is extremely affordable, and TVs with ROKU built in are sold at nearly cost price, so the barrier to entry for customers is quite low. In an advertising business, the more users you have, the higher you can raise the cost per ad, so profitability should keep improving. And honestly, once you own a ROKU device, what reason do you have to stop? Would you really go out of your way to unplug a dongle? I don't think so. That's why I think they can build an unassailable position as a platform. I believe they've already reached a level where meaningful new competition is nearly impossible.
I have no idea whether the current stock price is high or low, but since profitability will keep improving, I personally am taking a long-term watching stance. All investments are at your own risk. GO ROKU!!!!
I've Also Written a Business & Investment Summary Article
I've also written a business & investment summary article here, so feel free to check out any articles that interest you!
https://onexblog.onexxxx.com/entry/2021/01/20/202812
This AI column is produced by the online assistant service "TIMEWELL."
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