There’s a Better Way to Build a Smart TV

We’re kicking off 2012 with our Smart TV strategy, but before I talk about that let’s take a quick look back at last year. 2011 was an awesome year for us at Roku. We sold about a million and a half Roku players last year—three times more than we sold in 2010. We started the year selling only online, but by year end Roku players were in almost every major retailer, in about 12,000 stores across the country. We launched 250 new channels, including HBO GO, Disney, XFactor, FoxNews.com, and NBC News, bringing the Roku Channel Store to just over 400 channels. That’s a lot of entertainment. We introduced the Roku 2 family with support for casual games like Angry Birds, PAC-MAN and Jeopardy… then, we launched the $50 Roku LT. Phew we were busy!

Now that 2012 is upon us, we are turning our attention to the Smart (Connected) TV market, which will no doubt be a hot topic at the 2012 Consumer Electronics Show in Las Vegas next week. We think there are some fundamental issues that are preventing the current breed of Smart TVs from gaining mass adoption. Even though a lot of Smart TVs are sold in the U.S. many are never connected to the Internet and less are actually used for streaming. Some of this is probably just lack of awareness (I’m sure lots of people just buy a TV and don’t even realize it’s “Smart”). Yet another reason is the quality of the streaming experience can be poor. We’ve found that it just takes a lot of work to keep the experience current and performing at its best. We issue software updates almost every month, and add about one new channel per day. It used to be sufficient enough to have a few key channels (remember we launched with just Netflix) but those days are rapidly fading. With more and more content available for streaming the software stack and associated updates are a challenge for TV vendors.

With the rapid pace of innovation in the streaming world, and all the software updates, it’s inevitable that over time the software needs more hardware power. You see this in the mobile world. Apple and Google increase the memory requirements of their platforms regularly. New games come out that require faster processors. This same problem exists in the Smart TV world, but unlike phones people don’t replace their TVs every two years.

We’ve thought about this problem a lot, and believe we have the solution. Today we unveiled the Roku Streaming Stick™—a little stick about the size of a standard USB flash drive that will simply plug into a TV to instantly transform it into a Smart TV. It essentially includes everything in a Roku player—built-in WiFi, processor, memory and software—and will deliver all the channels found on the Roku platform today. It will also benefit from regular free software updates and channel enhancements.

With the Roku Streaming Stick, consumers will be able to enjoy a Roku streaming experience that is fully integrated into their TVs. They’ll only need to use one remote for their TV and for streaming. There won’t be any cables or a power adaptor. And the best part is, when the Streaming Stick becomes outdated (and let’s face it, technology hardware needs to be upgraded as software evolves), consumers can simply purchase an inexpensive new Streaming Stick without having to replace their much more costly TVs.

The Roku Streaming Stick will plug into MHL-enabled HDMI ports on TVs. MHL is a new standard that uses the HDMI connector on TVs to deliver power and other critical elements for the streaming experience. There are already TVs with MHL from Samsung and Toshiba, and you’ll see a bunch more announced at CES.

Roku Streaming Sticks will be available in retail later this year alongside our streaming players, and at prices comparable to today’s Roku players ($50 to $100). We think the streaming player market will be around for a long time, and will keep growing at a rapid pace. As Smart TVs start to catch on, we believe consumers will look for Roku to deliver the streaming experience.

As well as selling our Streaming Stick in retail for consumers to purchase for use, we are working with TV manufacturers to allow them to deliver a world-class Smart TV by bundling it with their TVs. Imagine Smart TVs with “Roku Inside” delivered via a replaceable Streaming Stick. Insignia will be among the first manufacturers to pair the Roku Streaming Stick to create a Smart TV for Best Buy.

We’ll have more announcements as the year progresses. In the meantime, check out these cool renderings of the Roku Streaming Stick.

Happy New Year!

Anthony