Remix by Max Fleishman
The little black box that could may be on its way out.
Roku, the company best-known for the set-top boxes that stream media directly to your television, recently unveiled its newest Streaming Stick, a USB-like device that plugs into the HDMI port in your television. As Wired reported earlier this year, however, the company’s Phase Two is about more than embracing the technology that have made the Fire TV Stick popular with consumers: Roku wants to become a software platform. The company’s hope is to “[power] the next generation of television—no matter what company is producing or distributing it.”
In layman’s terms, that means the company will likely be throwing its resources into producing television software in order to compete with the rise of the Apple TV. This January, the Tim Cook-owned company’s own media streaming device posted record numbers: Together, the Apple Watch and Apple TV brought in $18.4 billion in sales during the fourth quarter of 2015. (Their profits are bundled by Apple, so it’s hard to report on individual sales or the specific number of units pushed.) As of November, the Apple TV bested Roku to become the biggest-selling set-top box in America.
But instead of trying to beat Apple by building a better box, Roku is attempting to rethink the television—thus, making the next for a separate streaming device obsolete. During an April speech at the Collision conference, Roku CEO Anthony Wood predicted the demise of the dongle. “TVs are gonna win,” Wood said. "The consumers like convenience.”
Roku may help take down the very market it helped build.
He has a point: Why pay $199 (or even $50, the retail price of the Streaming Stick) for another piece of technology if you can kill two birds with one smart TV?
In doing so, Roku may help take down the very market it helped build.
When the Roku box was initially conceived in 2007, the technology was known as “Griffin”—inspired by the Tim Robbins character in Robert Altman’s The Player. The device was developed by Netflix as an extension of its nascent video streaming service: In order to watch Netflix directly from the Internet, customers would have to pay separately for what then resembled an extremely petite cable box.
At the time, Griffin’s major competition was TiVo, the once ubiquitous DVR recorder that had recently fallen on hard times. Once so ubiquitous that Miranda memorably romanced her TiVo on Sex and the City, the company had plummeted to just 1.7 million subscribers in 2007. For reference, that figure is just slightly less than the number of people (read: old people) still paying for dial-up Internet through America Online. In 2014, that number dropped even further—all the way to 937,000. That makes it about half as popular as AOL.
The rise of streaming Internet was the final death knell for services like DVR, because what services like Netflix and Hulu offered was a world where you never had to worry about recording your favorite television shows in the first place. Back in 2012, Ad Age predicted that the rise of Video On Demand, in which channels like HBO and Showtime upload content for users to view at any time would make the need to separately record television shows “obsolete.”
If Steve Jobs once promised that his company would be the one to 'crack' television, smart TVs will be the technology that cracks it open.
They were both right and wrong on that front: In many ways, streaming is just VOD for a post-television landscape. It’s on-demand programming you take with you. But if the living room is no longer the center of the home media experience, the success of the Apple TV shows that there’s still a demand for exactly what the Griffin promised: making the Internet the future of television. In order to do so, then-Netflix CEO Reed Hastings into a separate company, which we know today as Roku.
If the set-top box was originally intended to solely stream video content, its scope has expanded tremendously over the past seven years. As of December 2015, the Apple TV boasts over 2,500 downloadable apps, also functioning as an Internet browser and a game console; currently, 38 percent of apps available for the Apple TV are dedicated solely to gaming.
But if Steve Jobs once promised that his company would be the one to “crack” television, smart TVs will be the technology that cracks it open.
After just over a year on the market, Samsung announced at CES 2016 that the company had shipped 20 million of its Tizen-powered smart TVs although the company didn't state whether those figures were international or domestic.(Think of the product as Apple TV, just without the box.) In 2014, Roku sold 10 million of its set-top boxes—and that was seven years after Griffin initially launched.
Roku debuted its own smart TV two years ago, perhaps prophesizing its own doom. As CNet’s Matthew Moskovciak notes, there’s little that separates the Roku TV in terms of capability from its standard device. “A Roku TV is exactly what it sounds like: a standard HDTV that essentially has a Roku box built-in,” he writes. If the main attraction of the Roku TV is, thus, the company’s streaming technology, its hardware has only become more sophisticated with the recent introduction of its 4K television. With prices starting at $400, the company’s newest TV started rolling out to retailers, including Best Buy, this month.
If Roku is getting out of the set-top box industry, it’s a better time than ever to do so. With the introduction Google Chromecast and the Fire TV Stick, there are more companies competing for less space—and likely fewer customers. In a market where companies are scrambling to figure out what the “next big thing” is, what was supposed to be the future of TV becomes its past more quickly than ever before.
Should you need any indication of how true that is, just ask the folks at TiVo.
Nico Lang is a Meryl Streep enthusiast, critic, and essayist. You can read his work on Salon, Rolling Stone, and the Guardian. He’s also the author of "The Young People Who Traverse Dimensions" and the co-editor of the bestsellingBOYSanthology series. Follow him on Twitter @Nico_Lang.
A previous version of this story incorrectly stated that Roku produces televisions, rather than television software. The story has also been updated to clarify Samsung’s sales numbers for Tizen-powered smart TVs, and to correct the name of the Fire TV stick.