How Roku Will Keep Growing Revenue Per User | The Motley Fool

Roku ( ROKU -2.35 % ) ended 2021 with more than 60 million active accounts streaming on its chopine. Over the last 12 months, those users brought in an average of $ 41 in tax income for Roku. That comes from ads and its committee on selling subscriptions .
While that ‘s up 43 % year over year, CEO Anthony Wood thinks there ‘s a bunch of room to keep growing that act. He laid out the biggest opportunities the party is investing in at a late investor conference .
The Roku homescreen displayed on a television set.

Billing platform

Wood says Roku ‘s charge platform, which allows users to sign up for new paid cyclosis services within the Roku OS, is growing by leaps and bounds. That ‘s probably due to the inflow of raw premium cyclosis services we ‘ve seen introduced over the last couple of years .
Wood thinks there ‘s placid a draw of room for improvement to make placard easier for users and publishers.

additionally, climbing churn rates across the diligence due to rival could be an opportunity for Roku to grow charge. As consumers switch from one service to another, Roku could win more billings as it offers an slowly one-click solution for customers. furthermore, publishers that do n’t use Roku ‘s charge platform could miss out on the opportunity to win switchers .

Search and discovery

Roku already offers a few ways to search for and discover new contented, but Wood describes those tools as “ pretty basic. ” He wants to make it easier for users to find the content they want to watch, regardless of what streaming service it ‘s on .
When Roku improves the discoverability of contented, it creates new monetization opportunities. For one, it could put patronize listings or other advertising units in search results and discover sections of the OS. Second, if it pushes users toward more ad-supported capacity, Roku likely would take a abridge of the ad armory .

New experiences

Roku has experimented with a few drug user experiences over the past few months. It had a New Year ‘s know, where it pushed capacity around the holiday. It besides has a sports zone and celeb zone, which caters toward recess contentedness interests .
Again, a fresh exploiter experience serves to increase date and should lead to some high-value-ad units for publishers.

Roku Channel engagement

Wood says that Roku actually exercises a batch of control over engagement on the Roku Channel. It can drive viewership by promoting its content in its own ad units, and it can buy more and higher-quality message to drive battle american samoa well. In that way, it can control ad armory to align with its contentedness spend .
In fact, the Roku Channel plays a very crucial function in Roku ‘s overall advertising clientele. Roku offers advertisers a demand-side platform to buy up ad inventory. At the same time, Roku merely gets so much ad inventory from third-party publishers. so, as demand on its ad platform grows, Roku pushes more viewership to the Roku Channel, where it can exercise greater restraint over advertisements .

Investing heavily to get there

Roku is spending a distribute of money to maximize its long-run likely. “ We plan to maintain adjust EBITDA approximately in cable with 2020 levels on an absolute footing, ” CFO Steve Louden said on Roku ‘s fourth-quarter earnings call. “ We continue to invest against a significant opportunity and drive continued invention on the platform. ”
indeed, Guggenheim analyst Michael Morris pointed out Louden ‘s lookout suggests spend will closely double this class, going well above $ 1 billion. But that spend ought to go toward improving the monetization rate of its users. “ It ‘s not like we ‘re using the money to buy market share. We ‘re using the money to make the experience better, ” Wood said at the investors conference.

With the step up in investments, investors should look for ARPU to continue climbing in 2022 and beyond, leading to a more profitable business long term .

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