US recession will spark more cord-cutting and content streaming: Roku exec

The streaming-content movement will only get stronger because of the COVID-19 pandemic, Roku CFO Steve Louden tells Yahoo Finance. Read More...

The streaming content movement is gaining more ground, and at a faster clip.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Investors opted to take profits on red-hot Roku (ROKU) shares in the wake of first quarter-earnings on Friday amid concerns about weak advertising spending on the platform during the COVID-19 pandemic. But aside from that, the shift to streaming content players such as Roku from linear programming that comes with a monthly giant cable bill remains strong.” data-reactid=”17″>Investors opted to take profits on red-hot Roku (ROKU) shares in the wake of first quarter-earnings on Friday amid concerns about weak advertising spending on the platform during the COVID-19 pandemic. But aside from that, the shift to streaming content players such as Roku from linear programming that comes with a monthly giant cable bill remains strong.

In fact, with most everyone quarantined at home finding new ways to consume content, and many newly unemployed looking to cut costs, the transition to streaming perhaps got pulled up a few years in the matter of three months.

BRAZIL - 2019/09/11: In this photo illustration the Roku Streaming Player logo is seen displayed on a smartphone. (Photo Illustration by Rafael Henrique/SOPA Images/LightRocket via Getty Images)

BRAZIL – 2019/09/11: In this photo illustration the Roku Streaming Player logo is seen displayed on a smartphone. (Photo Illustration by Rafael Henrique/SOPA Images/LightRocket via Getty Images)

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="“Given the health and the economic crisis, at Roku we feel fortunate that we’re more relevant than ever before both to consumers for staying at home and content providers and advertisers,” Roku CFO Steve Louden said on Yahoo Finance’s The First Trade. Louden says Roku saw a “surge” in new accounts in April right along with a boost in streaming hours.” data-reactid=”30″>“Given the health and the economic crisis, at Roku we feel fortunate that we’re more relevant than ever before both to consumers for staying at home and content providers and advertisers,” Roku CFO Steve Louden said on Yahoo Finance’s The First Trade. Louden says Roku saw a “surge” in new accounts in April right along with a boost in streaming hours.

“The cord-cutting movement was accelerated prior to the recent impact of COVID. But the impact of people spending more time at home, and as they’re more mindful of budgets while looking at cable bills, could be substantial [drivers],” Louden added.

All of that was evident in Roku’s first quarter. Roku added 2.9 incremental new active accounts in the quarter, taking its total to 39.8 million. Streaming hours surged by 1.6 billion hours to a record 13.2 billion hours. Average revenue per user rose 28% from the prior year.

For now though, the market is taking its cue from Roku’s mixed guidance for the year.

Shares fell 7% on Friday as Roku warned of a substantial number of ad cancellations due primarily to the COVID-19 economic downturn. The company declined to provide detailed guidance, but it did note that it expects to produce an adjusted operating profit loss for the year.

“We assume COVID is an overhang on ad results for all of 2020 before improving in 2021 when we estimate the U.S. economy will begin to normalize,” wrote Pivotal Research entertainment analyst Jeff Wlodarczak in a note to clients.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Brian Sozzi is an editor-at-large and co-anchor of The First Trade at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.” data-reactid=”36″>Brian Sozzi is an editor-at-large and co-anchor of The First Trade at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.