Roku Shares Plummet After Analyst Warns of Price Devaluation for Streaming Media Players

Roku shares plunged 19.2 percent Friday to close at $108.05 after a sell rating in a Pivotal Research Group investor note. It cited more competition emerging for over-the-top video devices that will likely drive their cost “to zero,” while squeezing ad revenue. Analyst Jeffrey Wlodarczak highlighted Comcast’s Wednesday announcement it's providing its Xfinity Flex OTT device to customers for free, which is “likely to be copied by other distributors.” The analyst credited Roku for creating the streaming media player market, but said “everyone has realized the living room is too important” and companies with “massive leverage,” such as Comcast, are likely to make Roku growth “much more difficult.” Roku’s smart TV relationship with brands including TCL, Hisense, Westinghouse and Sharp “would appear to set them up favorably” for an international launch, but players such as Comcast, Charter and Altice, which in the U.S. “control the dominant data pipe into the household,” are coming up with their own ways to deliver streaming content and integrating it with broadband service. The Comcast model will likely be copied because it's a retention tool for customers wanting to exit pay TV, and a possible “significant revenue generator,” it gives providers some control of consumers’ time and in the case of Flex, is a “robust” product, he said. Roku launched seven streaming media players for the holiday season Thursday, ranging from $29-$100.