Roku shares dropped almost 12% Wednesday in the wake of an exclusive, multi-year deal between Amazon and Best Buy that will result in a large lineup of 4K and HD smart TVs powered by Fire TV’s platform for the U.S. and Canada.
Roku’s smart TV licensing partners include three Funai Electric brands (Sanyo, Philips and Magnavox), RCA, TCL, Element Electronics, Hitachi America, Sharp, and Hisense. Roku’s smart TV partners had also included Insignia (Best Buy’s Brand), up until the Amazon-Best Buy deal was announced.
The deal announced between Amazon and Best Buy today includes Fire TV Edition sets from Best Buy/Insignia as well as Toshiba. Amazon also has a Fire TV Edition agreement with another Roku partner, Element Electronics.
Roku’s fast growing Platforms business includes advertising, subscription revenue sharing as well as licensing fees from TV makers that have integrated Roku’s operating system. That piece of Roku’s business soared 129%, to $85.43 million, in Q4 2017.
Smart TVs integrated with Roku’s platform have become a key way for Roku to attract consumers to its platform. In its Q4 results, Roku said more than half of new accounts came way of licensed sources during the period.
Roku shares closed down $4.26 (11.84%) to $31.72 each Wednesday.
Roku is scheduled to release Q1 2018 results the afternoon of Wednesday, May 9.