On Wednesday, streaming research firm Antenna released a report suggesting that Howdy, Roku’s new $2.99-a-month SVOD service, passed the 1 million subscriber mark.
Naturally, investors listening into Roku’s quarterly earnings report on Thursday wanted to know if the estimate was legit.
Although Roku CEO and founder Anthony Wood did not offer any specific comment on the numbers, he did say that Howdy has been performing “extremely well” thanks to its status as an inexpensive alternative to Roku’s competitors.
“Streaming services have been raising their prices. They’ve been increasing their ad loads. So, a low cost, affordable streaming service is something that didn’t really exist in the market,” said Wood. “That’s a segment of the market we’re going after, and that’s the segment we intend to stay in.”
Howdy’s viewership is still a small fraction of its overall audience. Roku officially surpassed 100 million streaming households worldwide earlier this month.
Roku also achieved a total of 38.7 billion streaming hours in Q1 this year, a year-over-year increase of 8%.
But what about the money?
Streaming numbers aside, the company is finding ways to translate engagement into revenue.
Total platform revenue for the quarter came out to $1.13 billion, at a YoY growth rate of 28%.
Subscriptions and advertising, the categories that make up Roku’s platform revenue, reached double digit year-over-year growth. Subscription revenue came out to about $519 million, up 30% compared to this time last year, while advertising grew 27% to $613 million.
The fact that advertising makes up slightly more of Roku’s revenue is not surprising, considering how much the company has done to drive expansion in that category.
Most of Roku’s video delivery is done through third-party programmatic partners, Roku Media President Charlie Collier said. Ad spend through those channels also increased more than 40% YoY for the quarter.
Similarly, the number of advertisers using Roku’s self-serve Ads Manager product more than doubled YoY in Q1, according to the company’s letter to shareholders.
The Ads Manager would not have even been possible without generative AI technology, said Woods, echoing some of the statements he made during Roku’s last earnings call in February. Not only is Roku able to develop their products more easily with AI, he added, but it also allows SMBs to produce their own ads more cheaply and quickly.
More importantly, he said, the product “is opening up an entirely new market of performance advertisers” – kind of similar to the way that Howdy is opening up new subscriber opportunities on the other end of the business, come to think of it.
Guess it pays to diversify a little bit.
