Roku Goes Retail, But Will Mom and Pop Buy It?

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In the three years since launch, Roku has been fairly successful, selling more than a million units of its broadband set-top boxes for streaming movies and TV shows from services such as Netflix or Hulu Plus. But most of its sales have occurred online, with word-of-mouth marketing driving interest in Roku products. That could soon change, as Best Buy will now sell Roku’s mid-range XD set-top box, which retails for $79.99.

Landing a direct relationship with a big box retailer like Best Buy is a big win for Roku. Available initially for purchase only on Roku.com and through websites like Amazon.com, one of Roku’s challenges in growing its user base was that you had to know you wanted one before purchasing; there was no in-store impulse buying, which can be a key sales component for a sub-$100 CE device.

The retail-friendly Roku XD includes 802.11n Wi-Fi support and 1080p video playback, but doesn’t include the USB port, optical audio and dual-band wireless networking support that comes with the $100, top-of-the-line Roku XDS model. Late last year, Roku did a licensing deal with Netgear that brought Netgear-branded set-top boxes with Roku software inside to retail stores like Fry’s and Radio Shack, but that deal appears to have had little actual upside.

Even so, Roku has been able to build up a loyal group of fans who have purchased more than a million Roku set-top boxes since the company launched nearly three years ago. But compare that to the new Apple TV, a similarly priced CE device that sold a million units in just three months after it launched last year, and you can see how a marketing budget and retail distribution can help build sales for a fledgling product. Roku has been able to capitalize on Apple TV bringing some visibility to the online video streaming market, and actually said its sales increased after the Apple TV was launched — but its potential sales were still primarily limited to consumers shopping online.

While availability in big-box stores will help with visibility and no doubt spur sales from new users, it’s by no means a cure-all for CE manufacturers. The shelves of Best Buy stores are littered with products that few people buy; a case in point is Google TV, which launched last year in Best Buy stores but failed to take off. Roku’s hope is that broader retail distribution will help it capture some of the market for over-the-top video device by getting in front of consumers who might not know what its set-top boxes are all about.

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