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The Street
The Street
Colette Bennett

Roku is planning a change users won't like

Fast Facts

  • Roku has filed a new patent that will introduce more ads to users
  • If implemented, it would play ads on video game consoles and Apple TVs

When it was established in 2002, Roku  (ROKU)  founder Anthony Wood changed the way we watch TV by creating the first operating system specifically for televisions. Six years later, Roku had sold 10 million devices, capturing the public interest during a crucial stage of the streaming revolution.

These days, however, the streaming landscape has changed as its become more and more crowded, and like all the other businesses early to the scene, Roku has had to deal with headwinds. 

Related: Here's what a U.S. controlled TikTok could look like

Investors have been disappointed with the streaming company as well, once soaring as high as $473 a share in the years after the Covid pandemic. Today the stock is worth $61.19, roughly an 87% drop. Investor Cathie Wood, who once predicted the stock would rocket to $605 by 2026, has significantly cut her own holding as well.

A recently unearthed patent reveals one of the ways that Roku may deal with the rough waters, but it's one that its Apple TV and video game-loving customers won't care for.

According to the patent, which was originally filed on Aug. 9, 2023, anytime an HDMI device is plugged into a Roku-branded TV and is paused, Roku would play ads. This would affect video game consoles, Apple TV devices, and anything else that uses HDMI.

These ads would be served by identifying pauses in a number of ways, including taking frames from a video feed and monitoring the audio feed for long silences. Using ACR (audio or video-based recognition content), Roku would also identify what the user is watching and use that data to serve relevant ads.

While a patent is not a confirmation that the change is coming, it certainly suggests that Roku is considering the move. The company has been selling ad space on its screensaver since May 2023, but before now there was no way to control what a user did when using anything plugged into HDMI. 

Roku provided a statement to TheStreet about the patent, saying, "This is not an issued patent and there are no plans to put the HDMI ad insertion feature into our products at this time. Like the patents of many other technology companies, Roku patent applications often describe technologies explored by teams at Roku and many of these technologies do not become part of the products we sell."

Customers were also upset last month when Roku issued a change to its terms of service regarding Dispute Resolution. The catch was that without signing it, users were not able to use the TV anymore. There was a way to opt out by writing the company a letter, but Roku only gave customers a 30-day window to do so, which has since expired.

Related: Stock Market Today: Stocks extend slump as Fed rate-cut bets crumble

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