Andy visits The Watch List with Nicole Petallides to discuss TV streaming and e-commerce.

Roku, Inc. (ROKU) + Walmart Inc. (WMT) partnership

  • TV streaming is the next frontier in online shopping
  • As an exclusive retail partner, Walmart will fulfill products purchased on Roku’s streaming platform
  • Roku’s OneView ad-buying platform for TV streaming will have the exclusive ability to activate and measure shoppable TV ads for effectiveness
  • Roku is neither Netflix or just a hardware company

The Walmart and Roku partnership removes friction because TV viewers will be able to use their remote control to shop while watching TV commercials. In turn, shoppers can checkout using Roku Pay (Roku’s payments platform.) As the exclusive retail partner, Walmart will fulfill products directly on Roku’s streaming platform. Roku’s ad-buying platform for TV streaming, called OneView, will have the exclusive ability to activate and measure shoppable TV ads for effectiveness.

Roku has enjoyed a surge in active users since the beginning of the pandemic but has witnessed a slowdown in user growth in Q1 2022 adding 1.1 million active accounts. It has over 61 million total monthly active users. Roku's monetized video ads nearly doubled in 2021 driven by an increase in client acquisition, retention, and spending per client.

A common misconception is that Roku is a hardware company selling streaming devices and that's how it makes money, but the main investment thesis for Roku lies within its platform revenue. Roku makes money through digital advertising and its OneView advertising platform that brands can use to place adverts on the Roku platform. The Roku Channel is the largest free ad-supported linear streaming channel (FAST) in America, and brands would use Roku's advertising platform to place targeted advertisements on this channel. Adding commerce is an interesting potential revenue driver.

Amazon is an obvious competitor with a very strong position in consumer behavior analytics, logistics, and its Prime video streaming service.

Would you buy goods or services using your TV remote while watching commercials?