Did Roku Just Beat Apple in the TV Market?

January 7th, 2014

So there’s a published report this week, timed for the opening of the Consumer Electronics Show (CES), which boasts that Roku’s video streaming interface will soon find its way onto regular TV sets. This isn’t so surprising considering that Roku received some $60 million in additional working capital last May.

As many of you know, Roku, a private company that sells a popular TV set top box roughly similar in concept to the Apple TV, is regarded as the number one alternative. Indeed, if you want the widest selection of content, Roku currently boasts more than one thousand channels, with over 31,000 movies to choose from. The product lineup consists of four models that range from the entry-level $49.99 Roku LT, to the top of the line $99.99 Roku 3. There are also two versions of the Roku Streaming Stick that are designed to mate with so-called “Roku Ready” TV sets that largely consist of a few budget products.

Predictably, features are fleshed out as the prices increase. The Roku LT, for example, only supports 720p video, but is said to be compatible with “Virtually any TV.” The Roku 3 offers a “5x faster processor” and requires an HDTV with an HDMI connector. But any recent set is suitably equipped to work with the high-end model.

Now if you want to cut the cable cord and aren’t involved in Apple’s ecosystem, you’ll find a rich selection of channels on a Roku. There’s even direct access for customers of Time Warner Cable, so you may not have to use their set top boxes, although it requires a “modem” interface from the cable provider. Unfortunately, the app from the cable provider is strictly designed for live streaming and not for time shifting, so you still have to use the service’s hardware if you want a DVR.

Having so many channels, however, can clearly lead to endless confusion. If you thought confronting the 300 channels delivered by your cable and satellite provider in a single interface is difficult, imagine more than 1,000 separate channels with separate apps and interfaces. This may very well be the danger of what might happen on an Apple TV if a lot more content offerings become available.

That, indeed, may point in a direction to a possible solution, some way to handle all this varied content in a more digestible form. We’ll see.

In any case, Roku’s plan is to offer its software to serve as the “de facto operating system for a new wave of smart TVs.” So instead of buying the set top box, the technology will automatically become a part of TV sets that are so equipped.

At present, two low-end TV makers, Hisense and TCL, are expected to ship TV sets with the Roku system this fall. Perhaps others will join them, but it would mean replacing their own smart TV interfaces and paying licensing fees to Roku. I wonder how many mainstream TV makers would consider that move, considering that profit margins on TVs are already pretty slim as the result of cutthroat competition.

Of course, the elephant in the room is clearly Apple. The company’s intentions are still unclear, even though CEO Tim Cook has continued to speak of “intense interest” in the TV space and your living room. How that interest will be exploited is still anyone’s guess.

Some have suggested that the Apple TV will be expanded to support such newer technologies as Ultra HD, which doubles vertical and horizontal pixels and is clearly the feature du jour at this year’s CES. This would seem to be a given considering that the new Mac Pro and the latest MacBook Pro with Retina display have Ultra HD, or 4K, support, and the latest Final Cut Pro X update supports the standard as well. Clearly Apple expects this technology to grow in popularity. It’s also true that Netflix is expected to be rolling out 4K streaming this year, although you are going to have to have a broadband connection with thick pipes to be able to receive the higher definition content.

The other lingering possibility is that Apple will enter the TV set market with the most amazing or magical interface of all. This is what appeared to be hinted by the comments dropped by Steve Jobs in his authorized biography from Walter Isaacson. But I also wonder whether Jobs merely wanted to spook TV makers, and maybe Roku’s move into licensing its OS to TV companies is meant to stave off this move.

Yet another possibility exists, that Apple might want to do what Roku is attempting now, which is to license Apple TV technology to different manufacturers. This would be somewhat consistent with what Apple is doing with cars. More and more auto makers are in the process of adding some level of iOS in the Car into their new vehicles.

But I don’t think that Apple would license technology willy nilly to a TV maker without some controls on the finished product. They might, for example, want to require a minimum level of picture quality and features. I find it hard to believe that any old $400 flat panel TV would be eligible for an Apple TV interface if Apple chooses this direction.

However, it’s fair to say that Roku is clearly working hard to expand beyond the basic set top box offering. Let’s see how it flies, or whether it’s restricted solely to the cheapest sets on the market. Meantime, it’s clear there’s a lot more to come from Apple — and even Google for that matter.

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2 Responses to “Did Roku Just Beat Apple in the TV Market?”

  1. Constable Odo says:

    A few manufacturers have already beat Apple in the TV market. Panasonic, Sony, Samsung, LG, Vizio and others have all offered smart TVs for some time. What’s the big deal now that Roku has joined in the fray? Apple isn’t going to be able to have any exclusivity in the smart TV market unless they can break the traditional cable network model. I don’t need an exclusive Apple TV as long as I can buy a component that hooks up to the TV hardware of my choosing. Why would I buy a low-end TCL or HiSense TV when I can buy a high-end LG and add a Roku box to it if I want to. Roku even offers that Streaming Stick (for those TVs equipped with an MHL port) so I just don’t see what Roku is getting out of having the box components built-in to a TV. It’s a real head-scratcher to me.

  2. Morn says:

    1. Mindshare. The tech industry moves on perceived value as much as actual money-in-the-bank.

    2. A foot in the door ahead of the presumptive leader. Time was that would have been Microsoft–now everyone wants to out-Apple Apple.

    3. Licensing fees it might not otherwise see (ie just because someone buys a tv with Roku built in doesn’t mean they would have gone out and bought a Retail Roku box separately.)

    4. Good optics. People still maintain (despite all evidence) that the biggest mistake Apple made was not licensing its OS back in the 80s–and with this licensing deal Roku ties into that zeitgeist.

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