Roku Redo

More than a decade after being beaten by TiVo, Anthony Wood became a billionaire with cheap streaming gadgets. That business has never turned a profit. Roku is now betting its future on a model that’s as old as TV: advertising.

- Angel Au-Yeung

DVRs and Netflix have taught a generation to hate television commercials. Anthony Wood should know—he created one of the first DVRs that allowed viewers to skip commercials, and he also worked briefly at Netflix, directly under its cofounder Reed Hastings. But Wood’s latest pivot, in the midst of the streaming media revolution, has been to bet the future of his streaming device company, Roku, on the very thing consumers are said to loathe: advertising.

It’s a necessary pivot. Roku’s original business, selling inexpensive dongles that let TV viewers tap into the internet to stream 500,000 movies and TV episodes from Netflix, Disney and many more, is a low-margin one that has never turned a profit. Even worse, streaming has become a commodity, with streaming apps integrated into anything that can get online, from PlayStation consoles to tablets to smart TVs.

Wood, 54, is now betting that Roku will be able to move beyond its hardware business into a more lucrative software business: measuring the reach and effectiveness of ads on streaming apps.