Roku CEO Thinks Smart TVs Will Switch OS, Why That’s Likely
Roku CEO Anthony Wood predicted at Morgan Stanley’s Technology, Media, and Telecom Conference that not only will the smart TV market eventually shake out to a handful of players controlling the platforms, but that brands need to switch to a licensed operating system. Why? The economics of monetization, advertisements, features, and licensing partners cannot support all of the operating systems currently competing for their share of the TV market, he argued.
“I think it’s inevitable that there’s going to be consolidation around a very small number,” Wood said. “I predict three licensed TV brands. Roku will remain the number one brand, and if you’re Samsung, LG, or Vizio, you have two choices: you can keep losing market share, which is what’s happening, or you can switch to a licensed operating system. I don’t know what path they’re going to take, but that’s what’s going to happen.”
TCL uses Roku; LG has webOS; Samsung has Tizen; Sony, Sharp, Phillips, and Hisense use Android; Toshiba and Insignia use Fire; and Vizio has SmartCast. While LG and Samsung have taken steps to license their TV operating systems to other brands, progress is slow-moving.
“You still got a lot of people that are using LG, Samsung, and Vizio with their proprietary operating systems, and those are all going to switch over time to a licensed operating system,” Wood added. “It is unavoidable that the TV market will consolidate around a few operating systems, and when it occurs — LG, Samsung, and Vizio will be forced to switch.”
Wood compared the TV market to the PC and smartphone markets, “I mean if you think about the fact that there’s about 1 billion TVs in the world that are broadband — in households that have broadband. And every one of those TV is going to switch from whatever they’ve got today to a TV with a purpose-built license streaming operating system, just like all phones … It’s hard to find a phone that doesn’t either run Android or iOS. That same phenomenon is happening in streaming and for TVs, in particular, which is where we focus on,” he stated.
He also used personal computers as an example, noting that there used to be a large number of different types of PCs, but everything has consolidated around either Windows PCs or Apple PCs, and he believes that TVs are going down that same trajectory.
The transition from the linear world to the streaming world, especially in the U.S., will be drastic. Wood believes that subscale brands will either “go out of business or become primarily content production studios.”
The Smart TV OS market
It is virtually impossible to find a new TV that isn’t “smart.” But not all smart TVs are created equal. The various smart TV operating systems have their own pros and cons. While there are some that have an extensive range of apps, there are also some with a better user interface, some are more compatible with third-party devices, and so forth.
Analyst firm Dataxis predicts 2022 to be a momentous year in the market for Smart TV operating systems. The market is still crowded, however, the power dynamic could soon shift, leading to consolidation.
Google and Roku are advancing in the market for Smart TV operating systems. According to data from Dataxis, in 2020, Android TV had a 15.5% share of the installed base. Samsung Tizen had 34.4%, LG webOS 15.9%, and Roku 5.8%, according to an analysis by Dataxis. Other TV operating systems (Panasonic’s My Home Screen, Hisense’s Vidaa, Vizio’s SmartCast, Philips’ Saphi, etc.) had a combined 28.4% share, but the ‘other’ category is dissipating every year. Streaming sticks and boxes are not included in these figures.
Roku sees Google’s Android TV and Amazon’s FireTV as its main competitors. In addition, there are consumers that favor Sony, TCL, or Vizio TVs because they are compatible with Google Cast. If Samsung’s smart TVs switch to Android TV, it could address a larger market.
Guillaume Perrin, the Senior Analyst at Dataxis, said, “Samsung’s Tizen and LG’s webOS have been the two most used Smart TV platforms for years, but according to Dataxis’ new research, the Roku OS and Google’s Android TV have experienced the largest growth in 2020 and 2021, and the trend is expected to continue for 2022. Roku and Google, as well as Amazon with its Fire OS, already started licensing their TV platforms to second and third-tier manufacturers a few years ago.”
“2022 will also witness the growing adoption of Google TV, Android TV’s successor, and River OS, LG’s alternative to webOS. Market consolidation might then take a few more years, in the most definitely crowded Smart TV OS market,” Perrin added.
Roku TV OS
Roku operates the leading TV operating system worldwide and Roku OS offers access to the most popular video streaming services.
Compared to the Roku streaming stick version of the OS, the Roku TV OS has some key differences. For instance, you can connect an HDTV antenna to a Roku TV and utilize an electronic program guide (EPG) from within the Roku ecosystem. Some other features include a universal search function, a customized feed of upcoming shows, as well as a private listening mode. And like all Roku products, you can also install private channels.
There are a lot of manufacturers that offer Roku TV, such as TCL, Element, Insignia, Philips, Sharp, RCA, Hitachi, and Hisense.
“At a higher level, we see this huge opportunity to be the operating system for most televisions in the world,” said Anthony Wood. He added that most hardware companies that would love to have a service business like Roku’s.