Can Roku Compete in Streaming Video on Demand?

The future of Roku's (NASDAQ: ROKU) business relies on its ability to grow its advertising revenue. While the company is best known for its streaming devices, Roku makes a lot more profit off its platform business. Advertising accounts for a growing majority of its platform revenue.

Just ahead of its IPO, Roku introduced The Roku Channel, an app exclusive to Roku device users that streams free films and television episodes. Roku combines free content from select partners such as American Classics and Vidmark with its own licensed content from several film and television studios.

The new app is now available on all current-generation Roku devices in the United States. Roku will generate revenue from showing advertisements throughout the videos, splitting the revenue with content partners or keeping all of it for content it licensed.

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Source: Fool.com