nScreenMedia OTT multiscreen media analysis

Roku in for a long, tough fight for market share in Europe

Hisense UK Roku TV

Roku is finally making good on its pledge to launch internationally. The company will launch smart TVs with partners in the UK later this year. However, Roku does not have the same advantages in Europe as in the U.S. and will have to fight hard to catch up with competitor Amazon Fire TV.

Roku powered TVs arrive in the UK Q4 2019

TV shipments Q1 2019At the IFA consumer technology show in Berlin this week, Roku announced it is expanding its Roku TV licensing program into Europe. The company says it will launch its first smart TV in the UK with partner Hisense in the fourth quarter. It is inviting other smart TV manufacturers to license the TV OS to power their devices.

The company trumpeted its success in the US market with partners such as TCL, Funai, and Hisense. In the first quarter, one-in-three U.S. smart TVs sold were Roku-powered. It also emphasized the simplicity of its interface as a critical advantage. However, Roku will have a tough time duplicating its U.S. success in Europe.

Roku’s U.S. success driven by TCL

The biggest reason Roku has been such a success in the U.S. smart TV market is because of its partner TCL. TCL became the top shipper of TV sets in North America in the first quarter of 2019. The previous number one, Samsung, slipped into second place, ahead of Vizio and LGE. 70% of all U.S. TV sales are smart.

The sole announced Roku licensor in Europe is Hisense. According to the latest nScreenMedia research, only 3% of UK smart TV users have a Hisense TV. TCL has an even smaller share, with 1%. Nearly a third of UK smart TV users have a Samsung TV, using the company’s proprietary Tizen OS. 15% use LG’s webOS powered smart TVs and 12% use Sony smart TVs.

Amazon stronger in Europe

Roku does not sell branded streaming media player boxes and sticks in Europe. However, Amazon dominates the category in the UK and Germany. 39% of streaming media player users in the UK and 61% in Germany use a Fire TV device. Apple TV and Chromecast are a long way back with less than half the penetration.

Amazon is looking to press its advantage in the European market. At IFA, the company announced a new version of the Fire TV Cube and a Fire TV soundbar. It is also expanding its TV OS licensing business in Europe. It announced 11 new Fire TV Edition sets with partner Grundig and will deliver TV sets with JVC and the private label of German retailer MediaMarktSaturn.

Amazon’s more international focus has won it more active users than Roku. In May at the Pay TV Show, Jennifer Prenner, GM and Global Head of Marketing, Growth & Engagement, Amazon Fire TV told nScreenMedia Fire TV has 34 million active users.  The company said at IFA that it has 37 million active users, an increase of 3 million in under four months. Roku said it had 30.5 million monthly active users at the end of the second quarter, up 1.4 million over the previous quarter.

Roku interface not such a significant advantage

Roku’s focus on the simplicity of its interface is an important point in its favor. Unfortunately, consumers buy TVs based on screen size, picture quality, and price. A simple interface is unlikely to sway a consumer to buy Roku over another they prefer.

However, there is one interface issue that could sway a consumer to or from a Roku TV: availability of favorite streaming service. Channel availability is a massive advantage for Roku in the U.S. market but won’t be in Europe.

In the UK and Germany, Fire TV is the TV operating system services must support. It likely has more channels available than Roku will have when the Hisense TVs launch later this year. However, UK Roku TVs should still have most of the popular online TV services. The second most popular streaming media player in the UK, the Now TV box from Sky, is a private-labeled Roku streaming media player. In other words, all the popular channels like BBC iPlayer and Eurosport Player already run on Roku.

Why it matters

Roku is entering the European market by licensing its OS to TV manufacturers.

The company’s key advantages in the U.S. will not help it as much in Europe:

  • Amazon Fire TV dominates the UK and German markets
  • Roku partner TCL is not as popular in Europe as in the U.S.
  • A simple smart TV interface won’t sway a purchaser over screen size, picture quality, price.

Roku has a long hard fight against incumbents like Amazon Fire TV in Europe.

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