When it was introduced, in May of 2008, the Roku box was pretty far from a sure thing. It wasn’t clear there would be much demand for streaming video when cable, satellite, and IPTV vendors had such attractive pay-TV packages.
Roku’s chances would depend on a set of contingencies that didn’t seem all that plausible at the time. Namely, that fledgling streaming services such as Netflix, Hulu, and perhaps others would become so terrific that they would give viewers a compelling reason to either ditch their pay-TV subscriptions or fork over extra money for the streaming content, and also that those streaming services would remain independent and therefore need to offer their content on some third-party box. Furthermore, pay-TV companies would have to refuse to support Netflix and Hulu, and any other independent streaming services, through their set-top boxes. (That was actually a pretty good bet, given the bitter competition in the pay-TV market.)
Roku understood that even if all those ifs worked in its favor, it would still need to create a box that was inexpensive compared to game systems such as the PlayStation and the Xbox—which were already capable of streaming video, or compared to the ReplayTV, a standalone digital video recorder (DVR)–a type of set-top box unassociated with any specific cable-TV service. One thing was certain: Roku had to be inexpensive compared to the best-known streaming device at the time, the Apple TV, which Apple had introduced anticipating it would itself start a pay-TV service. All of those systems cost about US $300 or more.
On the bright side, TV viewers who didn’t already have a game player were not going to buy one just to get Netflix or Hulu. And what was the point of laying out what it cost for a game system to get an Apple TV that couldn’t even play Grand Theft Auto? Still, the bottom line was that an independent box had to cost significantly less.
The first Roku box, the DVP N1000, was based on the PNX8935 multiformat source decoder that NXP had designed specifically for low cost, high-definition set-top boxes. Making that device was a bit of a gamble on NXP’s part, as the market for streaming HD set-top boxes barely existed at the time. Roku would help create it.
Roku’s system also included 256 megabytes of memory. It supported both standard definition and high-definition streaming at 720p (Roku soon added support for full HD at 1080p). Introduced at $99, the Roku box hit the market at an opportune time: Netflix’s streaming service and Hulu were beginning to get popular, and people were looking for a device with which to view them.
The N1000 Roku box “started the race to low prices for streaming players which made them mass market,” Roku CEO Anthony Wood told IEEE Spectrum in an email. The company deliberately created an architecture that would ride industry trends toward lower costs, he added. Today, some Roku models sell for as little as $29 (several competitive products are within a few dollars of that).
Wood reeled off a list of qualities in that first Roku box that defined the streaming video device category. Before the N1000, most streaming devices were 17 inches wide or so: “We pioneered ‘Small is better,’ ” he said. Some of the current models are roughly the size of a big man’s thumb. Roku also pioneered the “supersimple TV remote,” Wood said, setting a standard that Amazon, Google, and others have copied.
The N1000 was the first software-updatable set-top box, and it used that capability to add channels. “Users didn’t do anything. It just happened. That was controversial at the time,” Wood noted. Another controversial feature was that the device had no off button. It was worth the initial pushback, Wood says, because it “improved ease of use tremendously.”
Ten years later, Roku is still the leading seller of streaming video devices—both boxes and smaller dongles—ahead of Amazon Fire TV, Google Chromecast, Apple TV, TiVo, Sony, and others.