Roku says it will begin building its own TVs

Roku announced it's launching its own TV line at CES 2023. Read More...

Roku (ROKU) announced at CES 2023 in Las Vegas on Wednesday that it will begin selling TVs that it’s designed and built on its own. The streaming giant currently offers Roku-branded TVs through third-party partners including TCL, Hisense, and Philips. The change means that Roku will control all aspects of the TV production process itself, rather than relying on those third parties.

The company will offer 11 models with sizes ranging from 24 inches to 75 inches and prices running from $119 to $999.

“Over the past 20 years, Roku has been instrumental in what is now the mainstream way to enjoy a great television series, a classic movie, or live sports,” Roku’s president of devices Mustafa Ozgen said in a statement.

Roku announced that it's making it's own TVs at CES 2023. (Image: Roku) — Roku announced that it’s making it’s own TVs at CES 2023. (Image: Roku)

“Our goal is to continue to create an even better TV experience for everyone. These Roku-branded TVs will not only complement the current lineup of partner-branded Roku TV models, but also allow us to enable future smart TV innovations. The streaming revolution has only just begun.”

According to Roku, the first-party TVs will go on sale in the U.S. this spring and, like third-party models, run on Roku’s proprietary operating system. All sets will come with Roku voice remotes, Find My Remote, and Private Listening modes.

In addition to building its own TVs, Roku also announced its new OLED TV reference design for third-party Roku TV partners. The reference design is meant to bring OLED image quality, which provides more vibrant colors and deeper blacks, to a broader audience.

Roku’s deeper moves into the hardware space come as the company grapples with poor ad sales amid a downturn in the broader digital advertising market. While Roku sells hardware like its streaming devices and TVs, the vast majority of its revenue comes from its Platform business, which is made up of ad sales.

In Q3 2022, Roku’s Platform business made up $670 million of its $761 million in total revenue. Its hardware sales brought in just $91 million.

But that reliance on advertising has hurt Roku in recent quarters. In Q2, the company missed Wall Street estimates on revenue and earnings per share, blaming the supply chain crunch and fears of falling advertising spending.

And while the company met analysts’ expectations in Q3, its Q4 guidance was well below expectations, a troubling sign considering Q4 should be its strongest quarter.

Those problems have weighed on Roku’s stock price throughout the last year, sending shares of the streaming giant plummeting more than 80% over the past 12 months.

The company will now have to ensure that its latest hardware investments pay off in either improved hardware revenue or better advertising sales by putting more sets in front of more consumers’ eyes. Wall Street will just need to wait and see.

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