Roku to Raise as Much as $50 Million

Photograph: Roku

Roku devices can give subscribers access to a TV version of Rovio's Angry Birds game.

Roku’s sales tripled to $100 million last year — in part because it bought radio and billboard advertising for the first time. To garner more brand recognition for its hockey puck-sized TV-set top box, the company intends to seek as much as $50 million that it can use in part for more ad purchases, Roku Chief Executive Officer Anthony Wood said in an interview.

The ten-year-old company, which competes with Apple and Boxee in the market for devices that deliver Web content to TVs, will beef up marketing as consumers watch more Internet programming in the living room. Unaided brand awareness — adspeak for the percentage of people who identify Roku when asked to name leading video-streaming providers — jumped to 18 percent recently from 7 percent just before the year-end holidays, Wood said. To get that percentage higher, Wood will invest $25 million this year on marketing , including more billboards and radio ads.

Wood said the next round of investors will probably involve strategic partners, rather then venture capital firms. New funding could come from TV makers or providers of satellite or cable services, he said. Some of these companies already bundle Roku devices, which give subscribers access to hundreds of services, including Netflix TV and movies, Pandora radio and a TV-version of Rovio’s Angry Birds game. Wood said Roku has raised $32.5 million. Earlier backers are Wood and Netflix, which spun off Roku in 2007, as well as Globespan Capital and Menlo Ventures, which also acquired Netflix’s shares.

Unprofitable Roku considered raising money in an initial public offering before opting to seek private investors, Wood said. “We’re aiming to be profitable in late 2013,” he said . “There’s so much opportunity out there.”

Wood’s not alone in trying to capitalize on it. He faces competition from Apple, the maker of Apple TV, another set-top box. Set to release a new version of its iPad tomorrow, Apple may also unveil an updated version of Apple TV, which may stream higher-resolution video, according to Gene Munster, an analyst at Piper Jaffray. Apple may also announce a full TV later in the year, Munster said.

While Apple has sold 4.2 million units compared with 2.5 million for Roku, Wood said that Roku has yet to expand beyond the US. “We outsell them in this country,” he said.

Roku will also invest in a new version of its hardware, called the Streaming Stick, that plugs into so-called “smart TVs” that come with an Internet connection. The device looks like a USB stick but plugs into the HDMI socket on TVs that support a new standard called MHL.

Roku, which means six in Japanese, is Wood’s sixth company. The predecessor companies were either shuttered or sold before going public. His most recent company, Replay TV, pioneered the digital video recorder market along with Tivo in the late 1990s. Replay TV had its IPO pulled in the Net crash of 2000.

“This time,” Wood said, “my goal is to do an IPO.”

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