Roku has a problem — its buttons aren’t printing enough money

Photo by Chris Welch / The Verge

The company is worried about how much money its buttons are bringing in. Not because it suddenly started making clicks for other companies to include in their products, but because it is actually an advertising company in streamer's clothing. For a fee, it will plaster their logos onto buttons that customers will likely see every time they use a streaming service. The buttons will only start that service.

The best return on investment for the company may be the paint it buys from its suppliers.

There are four buttons at the bottom of the remote that show a variety of streaming services. Over time, the buttons change as new streaming services are born, die, or make different decisions about where to spend their ad budgets. I would like to think that someone once received the worst remote in the history of the world, only featuring buttons for streaming services they don't use. If you can guess which one is made up, there will be points.

Image: Roku

If you count the D-pad as four separate inputs, the D-buttons make up 25% of all the buttons on the remote. It doesn't change much when you move up to its Voice Remote or Voice Remote Pro. It is easy to see why Roku makes the buttons so prominent; streaming services pay about $1 per customer to have their button on the remote. If the number is still correct, it would mean that Roku could make up to $4 per remote. That is a big chunk of change, since most of the 63 million active accounts were reported in the second quarter of the year.

When you sell a remote, you get money from whoever buys it and from four streaming services. It is smart to limit it to four slots on most models, since there are more streaming services than people who want to have a button on their remote. I learned from my economics classes that low supply and high demand equals cash in the bank. As long as it keeps selling devices and remotes, and convincing advertisers to pay the same amount for their own buttons, the company can print money.

So about that? The company said on its Q2 earnings call that it had to change its forecasts because people weren't buying as many devices. A lower expectation of button revenues in certain deals where we have sold those deep link buttons on the remote is the main reason for a dip in player sales.

It didn't change its financial assumptions just because it wasn't selling as many boxes or because it couldn't sell more to advertisers. The most explicit result of those reduced sales is the decrease in button profits.

Consumers aren't the only ones who are hesitant to spend money. The current economy could cause ad budgets to go down the same way as the start of the Pandemic did. It was reassuring. If they aren't willing to bid as high for the real estate on your remote, the price of the buttons may go down.

You might be able to ignore these buttons, but you can't reassign them to a service you actually use. It's thought that paying for button placement could help net them enough subscribers to make it worthwhile, but that's not always the case. If you wanted an example of how important your attention is, the buttons on the Roku TV could be just what you were looking for.