CEO Wood: Content Subscriptions More Important to Roku's Business Plan than Hardware Sales

In an interview with Bloomberg News that was published Wednesday, Anthony Wood, CEO of over-the-top company, Roku, revealed that the company hopes to raise $30 million in private funding this quarter from Menlo Ventures and other sources, and that it may go public next year--though he added that it is not currently working with an investment bank and has yet to set a date for an IPO. He also stated that the company has sold over 500,000 of its set-tops (note: in November, it launched two new set-tops, the $79.99 Roku SD and the $129.99 Roku HD-XR; the third set-top in the company's three-box product line-up is its original box, the $99.99 Roku HD Player), and that its revenue may almost double to around $75 million this year.

Wood also revealed that Roku, which recently launched a channel store (see the article published on itvt.com, November 23rd) sees content subscriptions as more important to its long-term business model than hardware sales, and that it expects to continue dropping the prices of its hardware and eventually to give it away for free: "It gets cheaper and cheaper, and the box will be free at some point in the not-too-distant future," he told Bloomberg. "We see hardware margins becoming less important over time and subscription content becoming more important."

Wood also stated that Roku hopes to have 100 channels available in its new channel store by the end of the year, and that they will generate revenues through advertising as well as through subscriptions. He added that the company plans to take a cut from content subscriptions sold through its service that will be "comparable to other media products," Bloomberg reported. "We're not far away from the time when you'll be able to get the same kinds of channels that any cable operator can offer," Wood said.

In related news: In announcing its fourth-quarter earnings, Netflix, the company from which Roku was spun off, revealed that 48% of its subscriber base streamed one or more of its titles during the quarter, compared to 41% for the prior quarter and 28% for the year-ago quarter. Reflecting the increasing importance of OTT delivery to its business model, Netflix last month updated its Web site so that the first tab that visitors to the site see is the "Watch Instantly" tab rather than the "Browse DVD's" tab (see the article published on itvt.com, December 22nd). NewTeeVee's Ryan Lawler has more on the company's results.