Roku 3 and Roku Feed Up the Ante in Video Streaming War

The battle to connect a box — or stick — to your TV for streaming content continues to heat up.

Roku 3 and Roku Feed
Source: Roku

A market where Apple Inc. (NASDAQ:AAPL) was able to slowly build a billion dollar business with little in the way of competition for its Apple TV set-top streamer erupted when Google Inc (NASDAQ:GOOG, NASDAQ:GOOGL) released the $35 Chromecast dongle in 2013., Inc. (NASDAQ:AMZN) piled on last year with the Fire TV and then the Fire TV Stick. Price wars have broken out. And all the while, Roku — a small U.S. company that pioneered streaming media boxes — has continued to lead the pack in sales.

On April 6, Roku went on the offensive, announcing updated versions of its Roku 3 and Roku 2 streaming boxes. The $99 Roku 3 gains voice search capability, a feature that had helped Amazon’s Fire TV stand out from the pack, and the $69 Roku 2 gains the Roku 3’s powerful CPU inside.

An over-the-air firmware update will speed up performance of the popular Roku Stick HDMI streamer. New Android and iOS mobile apps for using a smartphone or tablet to interact with a Roku device are also being released.

The most important part of the Roku announcement isn’t the new hardware, though, and it’s not the mobile integration. It’s a new feature called Roku Feed.

Improved hardware and mobile apps are required to stay in the game. With the rush to the TV by high tech giants Google and Amazon, Roku saw its lead eroded from 46% to 29% of the market last year. Apple has left its Apple TV unchanged for two years and as a result, it has been leapfrogged by the Chromecast while the Fire TV is gaining ground rapidly and threatens to knock it out of the top three.

Updating the Roku 3, Roku 2 and the Roku Stick was necessary to help Roku avoid a similar fate.

Roku Feed

Roku Feed is where things get interesting. This development changes the game for Roku and could have a ripple effect on both streaming video providers and movie theaters.

Of all the set-top streamers and streaming sticks being sold, Roku has carved a niche for itself by offering a huge amount of content (2,000+ “channels” currently being offered) and being platform agnostic.

While the Apple TV offers Netflix (NASDAQ:NFLX) support, the Netflix app gets second billing to Apple’s own iTunes Store content. With the Roku 3 or other Roku streaming devices, everything from Netflix to Amazon Prime is equally supported — they all appear as channels.

Roku Feed makes the pricing and availability of movies across those channels transparent to users. Here’s how the company describes the feature:

“Consumers simply ‘follow’ popular in-theater movies they are interested in and Roku will deliver automatic updates in the future as relevant streaming information about the movie becomes available. Consumers will receive updates in the Roku Feed when a movie is first released to streaming, becomes available from additional streaming channels or changes price.”

In other words, add a movie currently showing in theaters to your Roku Feed. Four times a day, Roku updates that feed with availability and pricing. You’ll know exactly when a new movie becomes available for rent or purchase, which streaming services offer it and the price they charge. You get updates if prices change or additional channels pick up the movie.

The company is rolling out this feature to all its current generation (post-April 2011) devices, so you don’t even need to buy a new Roku 3 to get it.

Movie Theaters, Competitors Should Fear Roku Feed

Even though average movie ticket prices increased in 2014, U.S. movie theater revenue declined by 5% last year. According to a survey posed on the New York Film Academy blog, three of the top five reasons cited for skipping seeing a movie in a theater were:

  • Ticket Prices are too high (1)
  • Prefer movies “on my own schedule” (3)
  • Can see movies at home shortly after theatrical release (5)

It’s easy to see that a feature like the Movies Coming Soon updates in Roku Feed play directly to consumer sentiment. Movie theaters are going to hate this because it lets a potential ticket buyer pick the movie they want to see, get a countdown to how many days until they can watch it from the comfort of their home and then see the price to do so — which is almost always going to be considerably less money than seeing it in the theater.

Consumers had access to this information before, but Roku Feed puts it all there in one place and automates the process.

Roku Feed is also a shot across the bow to streaming video providers. Consumers could always comparison shop the prices being charged to rent or buy a movie, but it was time consuming. And with prices often changing without notice, taking the time to check one day doesn’t mean the information is accurate a few days later.

Now someone with a Roku 3 or even an inexpensive Roku Stick plugged into their TV can effortlessly comparison shop individual movie prices across services and watch based on which is cheapest for the movie they want to see.

With the potential to add more content to the Roku Feed down the road — the ability to follow actors or TV shows, for example — this little company could have a big impact on streaming video services, forcing them to be more competitive with pricing on rentals and purchases.

Disruption outside the living room is also a possibility. Streaming boxes are becoming more popular than ever, and with the new Roku 3 showing the company is determined to fight to retain its top position, movie theater chains should be sweating a little more.

As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.

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