Roku CFO Accuses Google of Strong Arm Tactics to Force Price Hikes
The war shows no signs of stopping! At an investor event on Monday, Roku CFO Steven Louden accused Google of orchestrated efforts to strong-arm them into making their devices more expensive and therefore less competitive when compared to Google’s own products.
Louden explained to those attending the JP Morgan Global Technology, Media and Communications Conference that Google is trying to leverage their power to force Roku “to do certain things on the device side that would increase our cost basis and hence, erode our bill of materials cost advantage that we have from Google products like Chromecast and like Android TV.”
The long and short of it is that Google wants Roku to advance its hardware in order to meet the specifications of the AV1 codec that the company needs to establish 4K video streaming on its YouTube platform. Roku, protective of its budget-friendly advantage over the competition, is not keen to play ball.
For those not keeping score, here’s a brief recap of the spat:
Roku claims that Google asked the company to go beyond the treatment it receives on other streaming competitors’ platforms, like creating a dedicated search results row for YouTube within the Roku smart TV interface and giving YouTube search results more prominent placement.
YouTube TV is a live TV streaming service with more than 60 channels for $72.99/month. This plan includes local channels, 32 of the top 35 cable channels, and regional sports networks (RSNs) in select markets. The service includes an unlimited DVR.
With the recent addition of Viacom channels (BET, MTV, Comedy Central, etc.) to the service, they are only without Hallmark and A+E Networks (Lifetime, History, A&E).
They recently added NFL Network and new Sports Plus add-on which include channels like NFL RedZone for $11 a month.
YouTube TV offers select 4K content, including some live sports and on-demand shows, as part of their 4K Plus add-on. The 4K Plus add-on is $9.99 a month and also includes offline downloads and unlimited streams on your home network.
If you want a cheaper service with many of the entertainment channels on YouTube TV, you can subscribe to Philo which includes A+E, Discovery, Viacom, Hallmark, and other channels for just $20 a month after a 7-Day Free Trial.
Also, Roku says that Google is asking them to block search results from other streaming providers when users perform a voice search while the YouTube app is open.
Roku alleges that Google has asked it to favor YouTube Music results from voice commands made on the Roku remote while the YouTube app is open, even if the user’s music preference is set to default to another music app, like Pandora.
The dispute began last month when Google’s deal with Roku to carry Youtube TV expired. The two companies were not able to come to an agreement that would allow YouTubeTV to continue to have a home on Roku’s devices, so the company dropped the platform.
Google responded by creating a backdoor within the standard YouTube app, still available on Roku devices, that would continue to allow subscribers to access YouTubeTV content. Roku’s response to this move was to refer to the tech giant as an “unchecked monopolist.”
Roku is keenly aware of its place in the market, and knows that the price point of Roku devices is one of the factors that has made them so popular. Louden reminded those in attendance at the conference that its OS powers almost 40% of all of the smart TVs sold in the U.S., because, in his words, “it’s cheaper to build a Roku.”
Roku needs to continue to make headway into international markets to compete with Google, and it plans to continue to do so via hardware.
The company has 53.6 million active users globally, with its OS on a third of smart TVs sold in Canada. It’s also the second most popular smart TV OS in Mexico.
“We need TV OEM relationships, ideally,” Louden said, with regard to its expansion into markets like Europe.
Calling out Google’s reputation for investing in and then abandoning various software and platform ventures, Louden took a jab at their seemingly short attention span while championing Roku’s commitment to its products.
“A lot of times, they’re sort of focused on something…” he said. “Then, they’re not.”