On March 5, 2014 Roku announced the HDMI version of its Roku Streaming Stick, priced at $49.99. The Streaming Stick, while functionally identical to Roku’s OTT set-tops, is offered in the diminutive form of a dongle, and until now, has relied exclusively on the MHL interface to connect to a TV set. This new device is commercially available in the US, Canada, UK and Ireland.
The Roku Streaming Stick was first introduced during CES 2012, offering an additional and even more compact solution than streaming boxes (at about the size of an USB flash drive) to turn standard HDTVs into Smart TVs, with no need for an additional HDMI cable or power adapter since it connected directly to MHL-enabled HDMI ports. This device also offered an attractive solution to wall-mounted TV sets. Roku launched its Streaming Stick on October 2012 at $99, priced the same as the Apple TV box. Roku quickly established a number of partnerships with TV brands like Hisense, Insignia, TCL and Westinghouse to market “Roku-ready” TV models. Still, most HDTVs available in retail and those already installed in consumers’ households were not MHL-enabled. Additionally, even though this dongle was priced at par with Apple TV, it was still well above Roku’s own boxes. Together, these two factors represented an obstacle for Roku to significantly increase penetration of its Streaming Stick.
More recently, in July 2013 Google launched its own streaming dongle solution called Chromecast, which has a limited amount of supported apps currently available, but includes top OTT services in the US (such as Netflix, Hulu Plus, YouTube and HBO GO) and is priced very attractively at $35, which is less than the entry level Roku 1 box priced at $49.99. The move of Roku to launch a HDMI version of their Streaming Stick seems a very natural and strategic response to where the market is headed – seamless integration with the TV in both terms of look/style and functionality. Same as the Chromecast, this new stick does require an additional USB cable for power, connected either directly to the USB port on the TV or to a wall outlet using an adapter. One clear disadvantage of the new Roku Streaming Stick is that it’s priced $15 above Chromecast. Nevertheless, Roku has in its favor a broader geographic presence, a brand image and awareness built over several years, and access to a considerably higher amount of content, which may well make the price difference worthwhile for consumers.
Crucially, the new stick is priced the same as the Roku 1 box. In selecting this price point, Roku appears to be allowing for a degree of Roku 1 cannibalization, and may be signaling its intent to position the new, HDMI-compliant Streaming Stick as its entry level product.