Roku is looking to ramp up its business over 2010 by raising more money and lowering the price of its broadband set-top box, according to a Bloomberg report. Citing Roku CEO Anthony Wood, the report states that the company expects to nearly double revenues to approximately $75 million in 2010, led by increased sales of its lower-priced device.
Roku is seeking to raise an additional $30 million to ramp up those plans, in a financing round that it expects to close in the first quarter. Existing investor Menlo Ventures is already on board for that round, having bought out Netflix’s stake in the set-top maker last year. To date, Roku has raised $24 million from Wood, Netflix and Menlo.
Roku sold more than 500,000 of its broadband set-top boxes to date, and expects that number to top 1 million by the end of 2010, which will help drive revenues over the year. It now sells three models of its Roku player, priced from $79 to $129 depending on the configuration of the device.
The company doesn’t just plan to make money through hardware sales, but through sales of subscription and pay-per-view services through its channel store, which it launched late last year. According to director of corporate communications Brian Jaquet, the company will roll out a payment system that will allow partners to sell content on the device, with Roku taking a cut. The plan is similar to Boxee’s launch of a payment processing system, which it announced last week.
Still, Roku faces competitive threats on a number of fronts as it enters 2010; it will have to deal with the launch of a competing device in the Boxee Box, which is expected to launch in the first half of this year, and faces increasing competition from TV manufacturers that are embedding services like Vudu on their Internet-connected TVs and Blu-ray players.
As more connected devices like HDTVs and gaming consoles add content partners, the market for standalone devices that deliver Internet video services is expected to be limited, with some analyst forecasting that broadband set-top boxes will make up just 3 percent of connected devices by 2014. That could leave Roku with a limited window for establishing a business before the major consumer electronics device makers take over.