Roku has hired Morgan Stanley, along with Citigroup and Allen & Co, to lead an IPO for a valuation in excess of USD 1 billion, according to sources.
The Wall Street Journal (WSJ) is reporting that the over-the-top (OTT) device manufacturer is making hay from cord-cutting, with its base building to 15 million monthly active users. Its line of products, through which users can stream services like Netflix, Hulu and Amazon Video, first debuted in 2008.
Parks Associates research recently found that well over 60 percent of households now subscribe to one or more OTT video services, with a third subscribing to two or more services. Indeed, 88 percent of computer-based viewing is from non-linear sources.
"For years, the television has been the stronghold for the traditional TV industry," said Brett Sappington, senior director of research, Parks Associates. "Today, more televisions are connected to the Internet than ever, either directly or through connected devices like game consoles or streaming media players, such as Roku or Apple TV ... The market has fundamentally changed.”
Roku now generates more than USD 400 million in revenue per year, the company said. It makes money from device sales as well as advertising, offering inventory to the services that it supports. Media companies with apps available on the Roku platform have a revenue share arrangement with the service.
Additionally, Roku licenses its software to smart TV companies, Sharp and Hitachi, so that its app is built into the native interfaces for these screens.
The IPO is set to happen before the end of the year, according to the WSJ. – Rapid TV News