Roku has built a dominant position for itself as the co-leading streaming video distribution platform in US households, in a near-dead heat with Amazon. According to research firm Parks Associates, the two companies have a market share of more than 70%.
But can Roku maintain its lead over Apple and Google if the future of Americans is a home controlled by a voice-controlled smart home device that can turn a TV on and off and change channels?
That’s not what people want, claims Roku CEO and Founder Anthony Wood. He spoke in an exclusive interview with CNBC’s Alex Sherman.
(This interview has been edited for length and clarity. Wood’s thoughts on Roku’s culture can be found here.)
Sherman: Let’s talk about interactivity. Is it just a matter of time before Roku can see me sports and betting on my TV at the same time, and do other cool things that people have never seen before?
Wood: It’s a complicated question. A couple of points. First, it’s not as bad as it used to be, but even today, many companies still don’t really understand people’s attitudes towards television. They want to sit there, drink their beer and watch TV. You have seen over the years that there was this whole stage that there were interactive TV companies. They all failed because people don’t want to. My philosophy is to keep things very simple. Every time interactive ideas came up, we wouldn’t.
That said, there are a few exceptions. For example advertising – we offer interactivity to our advertising partners. When you see an ad that interests you, e.g. For example, a car ad, you can browse or just press a button and text me with a quote. So we experiment with this type of interactivity because it doesn’t get in the way of the viewing experience. If you want to get a free coupon because you are interested in a commercial, push a button, you can do that.
One of our main goals as a platform is to help you find content that you want to watch. Things like universal search – where you can search for an actor or movie on different services – and get information about whether something is free on one service or you have to pay for it on another, that type of interactivity is something that the People love when it comes to discovering content. So we’re looking for other ways to help people discover content that is by its nature interactive.
In terms of sports betting – maybe. We will see.
Is the future of the TV ecosystem one where every device in the house is connected and I just call my TV and it turns on and I don’t need a remote control anymore?
We are incredibly focused on delivering the best viewing experience. That is why we are successful. There are many skills that I think are stupid. People generally don’t want to talk to their TV to turn it on, for example. Because as soon as you turn it on, you’ll have to use the remote control anyway.
Well, you might do that today, but in theory you don’t have to, do you? Why can’t I control everything by voice? Isn’t that easier?
I don’t think people want to talk to their TVs. In cases where it is quicker and easier – for example when searching – we make voice remote controls. We focus on incorporating language in areas where it can really make a difference, like entering your password or email address, or doing searches – these are things that are a hassle, things on your remote control to type. But in other areas, like simply scrolling up and down or the power button, it’s actually easier to use the remote.
But I always lose my remote control.
Because of this, you can use your phone as a remote control. We also have a cool feature called Remote Finder that we use to help you find your remote control for you. We strongly believe in remote controls. If you look at Chromecast, they made a big bet that people wouldn’t use their remotes. That was not the case.
One topic that investors are curious about is international expansion. Do you have a broad international roadmap? I know you’re a little bit in Canada, Mexico, and Brazil. But there’s a whole world out there. What is the plan? Set it up for us.
We have a strategy. We have tactics and maps that we don’t publish. But our strategy is pretty simple. When you look at how our business model evolves, let’s focus on scaling first, and once you have enough scaling, focus on monetization. This is the same strategy that we talk about internationally. In most of the countries we are still in the process of building up in contrast to monetization. There are a few exceptions. Canada, as you mentioned, is the first country we entered. Now we sell ads there and we have The Roku Channel there. So we do monetization there.
The other part of our strategy is to take the same techniques that worked for us in the US and apply them internationally. So focus on growing our smart TV market share – we’re # 1 in smart TV market share in the US. We’re No. 1 in Canada. We’re number 2 in Mexico. Samsung is No. 1 there, but we’re catching up quickly. So the focus on smart TVs and the sale of low-cost players is our benchmark. For example, if we start a player now, we will start it in many countries at the same time and not just in the US
If you look at all of the countries we’ve stepped into, our market share is growing and we’re doing fine. Android has long been the default choice internationally because it was the only option. So you are our main competitor. But if we add new countries and focus on them, we have a great solution. The same reason we won in the US is the same reason we expect to win internationally.
I will go into this in more detail in the main feature, but after starting Roku, you worked for Reed Hastings on Netflix for about nine months. Did you model your leadership at Roku after him? And if not, was there someone you wanted to emulate?
My relationship with Netflix is very important to Roku, of course, but I only worked there for nine months. It’s been nine months. It was a great experience. I have a lot of people I respect, but I haven’t tried to copy anyone. I read a lot of business books when I was younger, but now I’ve stopped.
Is there a reason you quit? Did you feel like you just couldn’t use it anymore?
I think you go through different phases in your career. When you’re first starting out, just like when you first started out in college, you just have no idea. So reading books and talking to people is a great way to learn the basics. I think that as you progress, you get a lot more skilled and find that many books are not helpful. “Oh yes, if I didn’t know I would,” but that’s actually not the way to go.
One of the best things I’ve done to develop my skills since Roku grew is to have an advisor – something like a trainer. He used to be the CEO of a public company. So when I have problems I talk to him. This is David Krall. He was the CEO of Avid. He works as a consultant for us one day a week. Talking to an experienced CEO is helpful.
Describe yourself as a leader.
I try to hire good people – people I want to work with so the chemistry and the team are good – and come up with a strategy and some overall goals. I could come up with the strategy or work with the team to develop the strategy, but there will be a strategy. I think I’m pretty strategic. And then focus on executing and giving people the freedom and everything they need to do their jobs. That’s what I spend my time – attitude and strategy.
You are 56 years old, right?
May be. That sounds right.
Do you expect to run Roku as an independently traded company in ten years?
I have no idea. I’m happy to be running Roku right now. I have no idea what I’ll be doing in 10 years.
Do you know who your successor at Roku will be?
All public companies must have a succession plan, so we have one. I am very focused on developing talent in my team. But often there is also talent outside the company. So I don’t know I don’t plan on leaving, but if we were to hire a new CEO I would imagine we would look internally and externally.