Apple’s announcement of unprecedented partnerships with the likes of Sony, LG and Samsung to integrate the company’s AirPlay 2 technology here at CES has been generally well received. If anything, it caught most a little of guard given the Cupertino company’s battle with these three brands in the smartphone and other markets. But if there was one company that was crushed by the announcement it was Roku.
Roku has long had integration into smart TVs and has been to this point the main player in the space. That hasn’t changed but it will once the AirPlay 2 TVs start hitting the market later this year. As soon as the announcement happened, Roku stock dived some 10%. At the time of this posting, it is down still some 2.70%. This, just a day after jumping nearly 25% with a strong quarterly earnings report. Indeed some analysts are suggesting that Roku could very well never recover and will begin a slow and steady decline.
That is likely a bit of an overreaction but there is no doubt that Roku had a soul crushing experience with Apple’s announcements. Apple has literally billions of customers and many very much like to stay within the ecosystem on everything. The need for television streaming has been largely satisfied with the Apple TV product lineup but having essentially that device built into a TV becomes extremely compelling for Apple owners.
But equal to this are customers who do not want anything to do with Apple. They will gladly take a Roku integrated TV (or box) to avoid Apple. That is why I think that the doom and gloom being projected on the company is a bit overrated. Yes they are going to suffer, both short term and long term. Yes they are going to have a lot of headwinds in 2019 because of these announcements. But I seriously doubt they take their toys and go home this year. They will simply have to adapt to the new reality of having a serious competitor in their space. They will also have to make sure they target those non-Apple users to make sure they get their message out there to them.
Roku will have to shift tactics but they are far from dead.