Roku wants to Internet-enable millions of TVs, including Best Buy's Insignia line, with a version of its streaming-video set-top box that it has boiled down into a stick about the size of a USB flash drive.
"We think there's opportunity to expand our streaming platform to smart TVs," Roku founder and CEO Anthony Wood said.
The Roku Streaming Stick, to be available in the second half of 2012, plugs into a TV's HDMI port and "makes your TV a fully integrated smart TV," Wood said. The stick includes Wi-Fi connectivity, processor and software, and communicates with the TV using the Mobile High-Definition Link (MHL) specification.
Roku's first partner for the Streaming Stick is Best Buy, which will offer the device for its Insignia line of televisions. Roku expects to line up other TV manufacturers as well and will sell the Streaming Stick at retail for use with any MHL-compatible set. Wood expects the device to cost $50 to $100.
"Insignia is proud to be among the first manufacturers to pair the Roku Streaming Stick with a TV," Best Buy director of exclusive brands Scott Jacobi said in a statement. "The Roku Streaming Stick provides an elegant and easy over-the-top streaming solution for customers who want the full experience of a Smart TV without adding an external set box, HDMI cable and power adapter to their TV."
Roku has sold about 2.5 million set-top boxes through the end of 2011, boosting unit shipments 300% last year, according to Wood. The privately held company, which had about $100 million in sales last year, now wants to expand its footprint beyond standalone devices with the Streaming Stick.
Roku's pitch is that it handles all the software updates and Internet connection, so TV makers can focus just on their core products. As a plug-in device, the Roku Streaming Stick can be upgraded much more easily than replacing an entire TV set, which consumers generally replace every six to eight years. TV manufacturers can bundle the stick with a set or sell different models separately.
"We do a software update almost every month, and last quarter we released a new channel every day," Wood said.
The Roku Streaming Stick doesn't require any additional cables or a separate power source, and can be controlled by the TV remote. It will plug into MHL-enabled HDMI ports on TVs. The founding members of the MHL consortium include Nokia, Samsung Electronics, Silicon Image, Sony and Toshiba.
For content owners, the Roku Streaming Stick will potentially cover multiple TV manufacturers in one fell swoop instead of requiring deals and product integration with each individual company.
"The Roku Streaming Stick is a great solution for Netflix because it allows us to deliver the Netflix experience found on the Roku platform to potentially any TV," Netflix vice president of product development Greg Peters said in a statement.
Roku now offers more than 400 channels, including Netflix, HBO Go, Disney, Fox News, Amazon Instant Video, Hulu Plus and Pandora. In addition, it has added video games like Rovio's Angry Birds, available on the newer Roku 2 boxes.
In 2011, Roku significantly expanded its retail distribution. The company's set-tops are available at more than 13,000 store locations with retailers including Best Buy, Target, Wal-Mart, Costco, RadioShack, Fry's Electronics and others.
Wood estimated that 90% of the streaming-media player market is owned by Roku and Apple, with its Apple TV device. "We've sold more [set-tops] than Apple, but they are the biggest competitor in terms of sales," he said.
Currently, the 150-employee company sells products only in the U.S. In 2012, Roku plans to launch in the U.K.
Asked why Comcast and DirecTV don't allow their customers to access HBO Go via Roku boxes, Wood said, "The official answer is, you'd have to ask them." However, he added, the main point of contention appears to center on who owns the subscriber -- for example, whether or not viewers must be required to use a pay-TV provider's app to access HBO content (rather than the HBO Go app).