https://lowpass.beehiiv.com/p/roku-audio-layoffs-multiroom-speakers

Roku is prioritizing IoT over audio

Roku appears to have given up on competing with Sonos in the smart audio space: The company has shelved plans to roll out multi-room audio features to its speakers, seemingly abandoned the development of related technologies and laid off staffers working on audio hardware and software.

Roku laid off 200 employees in November. I’ve since learned that some of these cuts impacted people working on the company’s wireless speaker products, as well as audio R&D.

• Roku disclosed in its Q4 earnings report last week that more than a third of its “restructuring charges,” which is corporate speak for severance payments and related costs, were in R&D.

• The company also disclosed that it “abandoned future development for certain technology assets,” for which it took a $7.5 million impairment charge.

• That sum closely matches the $7.4 million Roku spent in late 2019 to acquire IP from Blackfire Research, a startup that had been working on multi-room audio technology.

Roku once had big plans for wireless audio. In 2017, the company spent $3.5 million on the acquisition of Dynastrom, a Danish startup that was also working on multi-room audio tech. As part of that acquisition, Roku brought on Dynastrom’s staff, which helped the company build its first wireless speakers.

• The company’s wireless speakers, first introduced in late 2018, initially shipped with their own voice remote. That remote featured a mysterious diamond button “reserved for future use.”

• The button was actually meant to be used for multi-room audio control, but the company abandoned plans to add the feature to its speakers when priorities shifted internally.

• Roku at one point even announced a licensing program that would allow other companies to build speakers based on its multi-room audio technology, but no such partner products were ever launched.

• Most of Dynastrom’s founding team has since parted ways with Roku. The startup’s ex-CTO left a year ago, and Dynastrom’s former CEO announced his departure last month.

This doesn’t mean Roku is giving up on audio altogether. The company has been selling speakers and subwoofers as companion devices to Roku TVs, as well as sound bars that feature a built-in Roku streaming adapter.

• It will likely continue to do so, as bundling speakers with TVs can help fend off competition from companies like Vizio and Hisense, which also make their own speaker products. Plus, sound bars with built-in video streaming give the company a competitive edge over Google’s streaming hardware.

• However, don’t expect Roku’s speakers to get a whole lot smarter than they currently are, or become more like Sonos products.

• Roku appears to have shifted much of its smart device work towards cameras and other IoT hardware, which it recently launched in partnership with Wyze. Some staffers who previously worked on audio were moved to IoT following the layoffs.

Ultimately, it all comes down to Roku’s business model. The company’s goal has never been to make money with its budget-priced hardware; there’s not much room for profits when you sell streaming adapters for $30, or a pair of speakers for $150. Instead, Roku uses hardware to build an audience, and then monetizes that audience with ads and services. The company has plans to launch services for IoT devices down the line, but it clearly didn’t see a path to do so in the audio space.