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Roku Wants to Start Streaming to Third-Party Devices (EXCLUSIVE)

In a major twist, Roku is looking to start streaming videos on devices made or controlled by competitors like Apple and Google, Variety has learned from three sources with knowledge of the company’s plans. Roku’s first foray into streaming on third-party hardware will likely involve mobile devices, according to one of those sources.

A company spokesperson declined to comment when contacted for this report Wednesday.

The move could further accelerate Roku’s efforts to transition from a hardware-revenue-based to a services-based business model — a transition that has been in progress for years. To consumers, the company is still best known as a streaming hardware manufacturer. But Roku’s business has evolved in recent years, as it also licensed its operating system to TV manufacturers, and began to focus more on advertising revenues.

Now, it plans to also stream some content on devices that don’t run its operating system, with mobile being a likely first step. Key to Roku’s expansion into mobile video is going to be the company’s existing mobile app, which has already been downloaded tens of millions of times on iOS and Android. The app’s current primary function is remote control, as it allows owners of Roku streaming devices and Roku-powered TVs to control these devices directly from their phones.

In fact, the app can’t currently be operated if there is not a Roku device available on the same Wifi network. This could change soon, as Roku is looking to integrate video playback directly into its mobile app. A first step is likely going to be the integration of the Roku Channel, an ad-supported channel that the company launched last month.

The Roku Channel currently offers free, ad-supported access to several hundred movies from major studios like Lionsgate, Metro-Goldwyn-Mayer, Sony Pictures and Warner Bros. as well as smaller publishers like American Classics, Fandor, FilmRise, Nosey, OVGuide, Popcornflix, Vidmark, and YuYu. However, Roku has been asking publishers to also grant the company the rights to stream their titles on mobile devices, according to a source familiar with these stipulations.

Roku may eventually go even further and incorporate additional content channels into its mobile app. This could either be in the form of channels the company owns and operates, or even by allowing publishers who have their own channels on Roku devices to also make those channels available via Roku’s mobile apps. Roku already streamlined the way content owners can publish their videos on Roku devices with the introduction of the so-called Direct Publisher program last year. The same technology should make it easier to integrate feeds into Roku’s mobile app as well.

The company has yet to publicly announce any of these plans. It did slip up in a recent job posting for a senior iOS engineering role, telling possible applicants that “Roku mobile is on the cusp of a major expansion.” The job description went on to detail that applicants should be comfortable with handling key iOS technologies used for media playback.

Roku initially launched its mobile app as a simple replacement of its hardware remote some years ago. Since then, the company has grown the app’s functionality to add a mobile version of its channel store, content recommendations, voice interaction and universal search.

The app has been downloaded more than 10 million times on Android alone. Data from app analytics specialist App Annie shows that it and consistently ranks in the top 20 of U.S. entertainment apps on Android, and in the top 30 for entertainment apps on iOS. In fact, at the time of writing, it was more popular on Android than apps from CBS, ABC and HBO.

At this point, it is unclear whether Roku has any immediate plans to also bring the Roku channel, or other content, to streaming boxes like Amazon’s Fire TV or Apple TV. Streaming device have traditionally been controlled more tightly by their manufacturers, which has resulted in key apps never appearing on competing platforms.

In filings for its recent IPO, Roku detailed that it currently generates 41 percent of its revenue from what it calls its platform business, which includes advertising and licensing fees.  This revenue has been growing significantly, but not in all areas: Roku can’t run ads against content on some of the most popular channels on its platform, including YouTube and Netflix, which is likely a key reason for the company to look for ad growth elsewhere.

Investors initially gave Roku a thumbs-up, letting its share price soar to close to $30 immediately following the company’s IPO in September. But investors have been more wary in recent days, with Roku’s stock sliding to a new low of $18.35 Wednesday. Roku is set to report Q3 earnings on November 8.

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