In a conversation with Bloomberg, Roku's CEO Anthony Wood stated that the company plans to raise $30M in private funding this quarter and wants to take the company public sometime next year. Anthony said he expects the company's revenue to double to $75M in 2010 and that the company will top the 1M units sold to date mark this year. Roku also plans to continue to cut the pricing of their Roku units, which has dropped by 30% since 2008.
In the interview, Anthony sees the hardware as becoming less important, eventually being given away for free, with the focus really being on "subscription content". Roku has been hard at work looking to bring more content to the device and expects to have over 100 channels available by the end of this year. While Roku's goal is to earn money from subscription fees and advertising, that will only work if there are enough devices out in the market. So while the hardware does become less important over time, unless Roku plans to license their platform to non-Roku devices, the company can't expect to make much money from content and advertising any time soon.
Even with 1M devices on the market, what percentage of those customers are going to use it to get content outside of Netflix? Many will, but my guess is that a lot won't use it for any other purpose aside from Netflix streaming. So even if Roku gets a 50% adoption rate of consumers willing to view some of the other content channels, half a million eyeballs is not enough to make money from when it comes to advertising and you have to split that revenue with partners.
One other interesting note from the Bloomberg article is that Netflix has confirmed that it sold their stake in Roku to Menlo Ventures, one of the original investors in the company. Netflix says they might discuss this in more detail during today's Q4 earnings call and I'd be curious to hear their reasoning. I don't know what prompted them to sell their stake, but I wonder if the fact that new devices like PopBox are coming to the market to compete with Roku makes Netflix have to look more neutral.