Snap Inc., the biggest technology company to go public this year, has seen the value of its shares nearly slashed in half as investors realized, among other things, that Facebook’s Instagram could marshal its considerable resources to simply copy Snapchat’s features.
Now investors are raising a similar concern about the company behind the tech world’s latest initial public offering, the video streaming service Roku, which begins trading Thursday on Nasdaq. But instead of having to worry about only one major foe, Roku must prove it can outmaneuver a cast of formidable competitors, including Amazon, Apple and Google.
All three offer streaming video boxes featuring the most popular apps, such as Netflix and Hulu, to the growing number of cord-cutters untethering themselves from cable television.
Moreover, Amazon and Google are large enough to sell their hardware at more affordable prices, adding more price pressure on rivals. Amazon, for instance, introduced a 4k Ultra HD Fire TV streaming player for $69.99 on Wednesday, around $20 less than Roku’s similar Premiere+ device. Not to mention, most TVs sold today feature functions to download streaming video apps.
So why should investors roll the dice on Roku when it begins trading at $14 a share?
“The simple answer is they’ve managed to compete so far,” said Jan Dawson of Jackdaw Research. “They’re up against the three biggest ecosystems and they’ve still managed to take considerable share.”
Indeed, Roku’s 32.6% market share of America’s 150 million connected TV users last year was ahead of Google Chromecast (29.9%), Amazon Fire TV (26.3%) and Apple TV (19.9%), according to research firm EMarketer.
Buttressing that success, Dawson said, is the fact Roku users aren’t locked into any one ecosystem; it offers everything. That gives its users more choices for apps rather than being force fed Apple, Amazon or Google content.
“They’re like the Switzerland of the streaming…
Source: Mobile Tech Today