Roku: Designing a Business Model for TV Streaming

Roku Inc. was launched in 2008 as a spinoff from Netflix. Inc. The company sold streaming devices—tools that transformed standard televisions into smart TVs—and operated a free advertising-supported streaming television service called The Roku Channel. Throughout the 2010s, Roku Inc. dominated the streaming device industry. In late 2022, however, the company was facing several challenges. Increased operating expenses from recent investments in content creation, coupled with an advertising recession, had led to declining profitability. In addition, the company faced increased competition from established technology giants such as Google LLC and Samsung Electronics Co. Ltd., in addition to the entry of major US telecommunications leaders such as Comcast Corporation and Charter Communications Inc. To maintain its market share and drive profitability, Roku Inc. could enhance its advertising capabilities, continue pursuing aggressive negotiation tactics, prioritize geographic expansion, further expand its product line, or seek a buyer. The company’s management team had to make decision.