This week, ahead of the start of CES in Las Vegas, Amazon announced its Fire TV streaming platform now has over 40 million active users, a 6 million-user increase relative to May 2019. The company also unveiled solutions for bringing Fire TV to rear-seat infotainment systems and set-tops provided by pay-TV providers, for optimizing the audio experience delivered by living room speakers when Fire TV is used, and for helping OEMs roll out Fire TV sets with the help of contract manufacturers.
Roku, for its part, unveiled a program for enabling third-party sound systems to be controlled using Roku remotes (compatible systems will sport a "Roku TV Ready" badge). And at a time when Roku estimates that more than a third of all smart TVs sold in the U.S. run the Roku OS, the company announced that 15 TV brands will launch Roku TV sets in 2020 in the U.S., Canada, Mexico and the U.K..
Roku reported having 32.3 million active accounts for its platform at the end of Q3 -- less than what Fire TV claims, but up 36% annually. The FactSet analyst consensus is for the company to have ended Q4 with 35.8 million active accounts, and to end 2020 with 44.5 million.
Though its user base is smaller than Fire TV's, Roku does maintain (per third-party estimates) a larger market share in the U.S., which accounts for an outsized share of online ad spend in general and online video ad spend in particular. Amazon, by contrast, is stronger in Europe.
Importantly, Amazon and Roku are each moving aggressively to grow their streaming platform ecosystems at a time when they're also moving aggressively to grow video ad sales. They're also happening at a time when online video ad sales could be hitting an inflection point of sorts, as higher streaming activity, pay-TV viewing declines, improved targeting/measurement tools and a relatively limited amount of supply potentially lift ad prices.
Though exceptions might be made for larger media/streaming partners, Amazon typically requires Fire TV apps that run video ads to hand over 30% of their ad inventory to Amazon, as well as to rely on the Amazon Publisher Services platform to integrate with third-party ad networks. Likewise, Roku requires ad-supported apps to either hand over 30% of their ad inventory or to let Roku fully manage their ad sales in exchange for a cut.
Roku has been reporting triple-digit annual growth for its video ad impressions, and (thanks in large part to its video ad momentum) reported that its total "Platform" (non-hardware) revenue grew 79% annually in Q3. The company also recently inked a $150 million deal to buy video ad-buying platform Dataxu to strengthen its sales pitch to video ad buyers, and has for the last two years been running an ad-supported video service (The Roku Channel) that provides it with a source of additional inventory to sell.
Amazon, meanwhile, launched a pair of ad-supported Fire TV video services -- IMDb TV and a news app -- to give it additional inventory to sell, and also struck deals with The Trade Desk (TTD) and (before Roku bought it) Dataxu to give their ad-buying platforms access to Fire TV inventory. Strengthening Amazon's sales pitch to marketers: The company can leverage the mountains of shopping data it has to improve ad-targeting, as well as let advertisers run campaigns that cut across both Fire TV and other platforms.
2020 should be a year of strong growth for both Amazon and Roku's streaming ad businesses. And the non-stop efforts of each company to maximize the number of eyeballs that their respective streaming platforms can claim will have a lot to do with it.