Although Roku’s device sales make up 59% of its revenue, the growth of the segment is declining as Google, Amazon, Apple and other competitors push for more market share.
However, its platform business, which consists of ads and subscription revenue, has expanded rapidly and now represents 41% of Roku’s total revenue.
Advertising accounted for 67% of total platform revenue in the six-month period ending June 30, Roku revealed Friday in its S-1 filing. Roku’s overall platform revenue has been pegged in the $100 million-plus ballpark.
Now, the company is seeking to grow its advertising segment even more with the Wednesday launch of a free, ad-supported service for Roku device owners dubbed The Roku Channel.
It will house a library of on-demand content from existing Roku Channel Store partners such as FilmRise and OVGuide, as well as titles from Lionsgate, MGM, Sony Pictures Entertainment and other studios.
The Roku Channel will run on Roku’s Direct Publisher, a video distribution and developer platform that helps content owners create and monetize Roku apps.
“The content in The Roku Channel is a combination of content already available on the platform from select, participating publishers, including those using Roku Direct Publisher, and content we’ve licensed,” according to a Roku spokeswoman.
Roku will manage all ad sales for The Roku Channel, and the company promises its hourly commercial load will be 50% lower on average than traditional linear TV programming.
As traditional TV audiences fragment, Roku is betting that over-the-top TV will help recapture those viewers.
“Our growth in active accounts and hours streamed has attracted more content publishers and advertisers to our TV streaming platform, creating a better user experience, which in turn attracts more users,” the company said in its S-1.
Roku claims to have 15.1 million active accounts and the largest number of ad-supported TV channels in the industry.
In the six months ending June 30, the number of hours streamed on Roku, including advertising, grew 76% year over year to 2.9 billion hours.