Roku launched in May 2008 as a Netflix streaming box, becoming the first mass-market streaming device and establishing the model for cord-cutting. The $99 purple box played Netflix instantly on TVs, avoiding computers and DVD mail. By 2023, Roku reached 70+ million active accounts, dominating the U.S. streaming platform market.
Netflix’s Independent Spin-Off
Roku began as Netflix’s internal project to build a Netflix-dedicated set-top box, but Netflix CEO Reed Hastings decided hardware wasn’t Netflix’s future. Roku spun out independently in 2007, launching in 2008 as the first device offering Netflix streaming directly to TVs.
The original Roku DVP supported Netflix, Amazon Video, and MLB.TV. The simple remote and straightforward interface appealed to non-technical users frustrated by computers. As streaming services proliferated (Hulu, HBO, Disney+), Roku’s platform-agnostic approach—supporting all services equally—gave it edge over competitor devices tied to ecosystems (Apple TV to iTunes, Fire TV to Prime).
Streaming Stick and Platform Strategy
Roku Streaming Stick (2012, $49.99) miniaturized the box into HDMI dongle, competing with Chromecast. The company offered devices at every price point: $29.99 Express (basic), $49.99 Stick (portable), $99.99 Ultra (4K HDR), ensuring Roku suited every budget.
The real genius was platform strategy—Roku OS licensed to TV manufacturers (TCL, Hisense, Sharp) created “Roku TVs” with built-in streaming, eliminating external devices. By 2021, one in three smart TVs sold in U.S. ran Roku OS. This distribution gave Roku enormous leverage with streaming services.
Roku’s business shifted from hardware (low margins) to advertising and revenue sharing—taking cuts of subscriptions purchased through Roku platform, selling ad inventory, and promoting streaming services for fees. By 2023, platform revenue exceeded hardware sales, validating the ecosystem approach.
Sources: The Verge Roku history, CNBC Roku business model, Parks Associates market share