[jonathannorris]

Roku and Google (Chromecast) have always been subsidizing their hardware. Their business is: selling your data, showing you ads, and selling you subscriptions, it was a race to the bottom to get on as may TVs as possible. Which has turned into a really solid business for Roku. But it also means that Roku's business interests will conflict with what's best for their consumers, updating their devices to support AV1, fighting with streaming partners to collect more revenue, and selling their customer's data.

If you want to see what the real cost of these devices with margin would be, look at the comparatively ridiculously priced new AppleTVs.

[mdasen]

The Apple TVs are quite over-powered devices compared to competitors. They come with A12 processors getting around 1,100 single-core and 2,800 multi-core Geekbench scores. To put that in perspective, the brand-new Samsung Galaxy S21+ gets 1,000 single-core and 3,100 multi-core. Apple is shipping an Apple TV with a processor that basically matches the best processors ever on Android.

That's quite over-powered for a device whose main function is decoding video which can be done in hardware rather than the main CPU performance.

The last generation came with 3GB of RAM which is also more than you see in TV devices. This generation might be 4GB.

Likewise, the remote is metal, comes with a scroll wheel, and is rechargeable rather than using AAA batteries like competitors.

I think the cost of Apple TVs is partly because Apple has decided to create a device with much better specifications. No other device is offering performance that rivals the best Android phones ever made.

I think part of this is that Apple is (half-heartedly) thinking of the Apple TV as a gaming device. They noted that you could hook up XBox and Playstation controllers to it during their keynote.

The real competition for an Apple TV is the NVidia Shield. The Shield TV costs $150 and the Shield TV Pro costs $200 - similar to Apple's price point, but with worse specs.

The Shield TV Pro is $200 and comes with 16GB of storage (compared to 32GB on the base Apple TV 4K at $180). The Tegra X1+ processor is no match for an A12. The cheaper ($150) Shield TV stick only comes with 2GB of RAM and 8GB of storage. It's hard to find Geekbench results for the X1+, but this (https://androidpctv.com/comparative-nvidia-tegra-x1-plus/) seems to indicate Geekbench 4 results of 1,300 and 3,700 for single/multi-core. The A12 hits around 4,800 and 11,000. NVidia is selling a competitor with less storage and way less processing power for more money (probably less RAM too).

I don't think one can compare a Roku or Chromecast to an NVidia Shield TV. The Shield will run circles around those devices. An Apple TV will run circles around the Shield. Some of it might be companies not having the same business model, but some of it will be the fact that the Apple TV is a device with way higher specs.

[jvolkman]

These price points are approaching Xbox Series S at $300, which is certainly a better streaming + gaming option.

[bombcar]

The Apple TV is a headless iPhone - I will not be surprised to see it "merge" with the Mac mini at some point when it has the M1.

[dylan604]

>That's quite over-powered for a device whose main function is decoding video

Is it? Maybe. However, it's also able to run games, and that's being pushed with Apple's Arcade service. So, yes, it needs all of that CPU/GPU for games. You can connect an Xbox/Playstaion controller to it for game play.

[phh]

FWIW, considering what's in it, Chromecast with Google TV probably has positive margin in the USA. It is using only off-the-shelf very cheap components. Except for USB-C part, you can find same-speced boxes for 30$ on chinese market. I'm not even going to mention the price of Chromecast with Google TV in Europe, for which Google probably has 30-50% margin, (It's 70€, so 70$ tax-excluded).

This doesn't hinder your argument though.

[pja]

The real Roku profits lie in charging streaming channels for access to Roku customers I believe; is the viewing data (which you can turn off at the per-device level) worth that much?

[mdasen]

I think it's not just the data. At this point they're selling access to you.

If you're Roku and you're the largest in the market, a company like YouTube or NBC or HBO needs to be on your devices. So you ask for X% of the profits and Y% of the ads and you start skimming off that.

Many reports have said that Roku wants 20% of streaming charges and 30% of the ad buys. If HBO is charging people $15/mo, that's $3 per HBO subscriber per month. For apps like Discovery or others with ads, you're potentially becoming the largest television advertising powerhouse ever. Imagine 10 years in the future if Roku is 80% of the streaming box market and they're selling 30% of the ads across all the TV you watch. Imagine if they're getting 20% of all the pay-TV revenue.

Right now, Netflix has been too big for companies like Roku to put pressure on. However, Netflix has been losing ground as more competitors pop up in the market. I'm not saying that Netflix is vulnerable to pressure now, but as more and more consumers get Peacock, HBO Max, Apple TV+, Amazon Prime Video, Disney+, etc., there's the possibility that Roku could also start pressuring Netflix.

Historically, Netflix has been the company that pressured the device makers. If your device couldn't play Netflix, no one would buy it. I think that's still the case today, but 10 years from now Netflix will be facing off against an entire industry of streaming companies and it's possible that some households become HBO Max/Prime households (or the like). If that happens, Roku will start having power over Netflix.

[downrightmike]

Netflix needs a pivot to stay relevant. Right now it looks like self programming, but everyone else can do that, and Disney can do it better. They'll be around, probably more like Hallmark channel than the big name they are now.

[rblatz]

Yes, there are services that sell the viewing data to help advertisers track conversion on their tv ads.

[jimmaswell]

Is Chromecast just hoping you use it for YouTube and see YouTube ads then? It doesn't have any ads of its own that I know of. Just a slideshow of nature pictures while it's idle, then whatever you cast to it when you're casting.