Ask anyone to name the biggest streaming services in the world, and they’ll likely find the usual suspects: Amazon, Netflix, or Disney. What’s less likely to feature is The Roku Channel, the local, ad-supported streaming service for Roku users. But Roku isn’t just an afterthought and has taken a series of steps to bolster its free streaming ecosystem. We sat down with Scott Rosenberg, SVP of Roku and GM of its platform business, to get it all figured out.
“The hardware side of our business,” he said, is being run “at about the breakeven point, so that we can build a profitable business on the media side.” Roku makes most of its money from licensing, data, and advertising, rather than the streaming pucks, dongles, and TVs it’s known for. And business is booming: the company generated $ 1.78 billion in revenue and allowed 58.7 billion hours of streaming in 2020. A key part of this strategy is its own channel, which the company says “drives a virtuous cycle of viewers, advertisers and content.”
And, these days, more and more people are turning to The Roku Channel for their entertainment, with around 63 million people using the app. Rosenberg said it was this increase in viewership and the commensurate increase in ad spend for big brands that made his team stronger. He added that increasing viewership allows them to “be more creative and think bigger about how we get content.” He added that there were nearly 200 studios and distributors looking to get their material on Roku’s own platform – everything from MGM and Lionsgate to small independent houses. You don’t even need a Roku device to access it, as the company also offers a standalone iOS and Android app to watch the content on.
There are only three months left in 2020 and Roku has already spent substantial sums to bolster its content offerings. In January, he purchased Quibi’s content library from the wreckage of the failed micro-TV broadcast of Meg Whitman and Jeffrey Katzenberg. The company now owns around 75 short TV series, of which Chrissy’s Court, Reno 911! and 50 states of fear. (The latter is an anthology series which has adapted from American folk tales which includes The golden arm). In March, Roku also picked up the owner of the This old house franchise, including 1,500 episodes of the Home Improvement series, and the studio where the production is based.
“These are more aggressive moves than what you’ve seen from us in the past,” Rosenberg said, “made possible by the fact that the Roku Channel has grown.” Certainly, This old house is a mainstay and has been airing almost continuously since 1979. Quibi’s shows, on the other hand, are likely to reach a large global audience for the first time when these episodes are released, although the distribution model is still ongoing. development. Given the watch social media sparked by some of those early Quibi hits, however, it’s likely people will want to tune in to see what it was about. (It also helps that Quibi relied heavily on star power for his first wave of shows, which Roku can tap into for the secret price he paid for the catalog.) He’s also released his first original series, Zero, who had a lukewarm welcome until now.
The reputation of the chain may be one where you will have to make an effort to find diamonds buried in a lot of rough. In March, for example, you might get a number of movies like The maze runner, enemy at the gates and Vanilla sky, the kind that appears on late night TV to keep insomniacs company. Likewise, the TV series on offer are a mix of one-season wonders, older reality shows that complement the schedules of many other channels and archive content, like Windfall.
Rosenberg says that, in many ways, that’s part of Roku’s charm, as he can’t burn billions on the altar of original content like his well-heeled partners. “The criticality of having exclusive content for a SVOD [Subscription Video On Demand] the service is very high, ”he said,“ because you’re trying to justify to that consumer month after month why they should stay on. Roku, meanwhile, as a “pure, free, ad-supported service” doesn’t need to worry about exclusivity, “it doesn’t matter if the content is available elsewhere.” This puts it side by side with a service like Crackle, which offers a similar selection of films that few others are clamoring for.
However, most ad-supported companies are going through a period of turbulence, especially in the aftermath of the 2020 pandemic. Much of the billions of advertising money spent through 2020 has been taken from linear television networks. and disseminated and placed with the big giants of social media. Rosenberg says, however, that Roku has been able to divide both sides of the equation, as a television company capable of niche advertising as well. The other thing that catches the attention of marketers to streaming is that it is ultimately a much superior medium for TV advertising, ”he said.
In order to bolster the advertising side, Roku has armed its in-house advertising company in anticipation of increased spending. He bought Neilsen’s Advanced Video Advertising Unit, which is able to insert targeted advertisements into commercial breaks, leading to real-time targeting of users with specific needs. A little after, Variety reported that he was building his own ad content studio, hiring several executives from Funny or Die in the process. “We believe tens of billions of additional dollars will be reallocated [by advertisers] over the next two years to streaming, ”said Rosenberg,“ we believe, as a platform, with our scale and our data, we can be a major player in creating these mainstream advertising experiences. “
Rosenberg ultimately believes that Roku is positioning itself as the better alternative to the big streaming networks, rather than their rival. “Consumers will have a limited appetite for the number of services they will subscribe to,” he said, “but that is certainly not going to satisfy consumers’ TV appetites.” “So where is the consumer going to get all the rest of the content they’re going to see?” he added. It’s in this space, filling in the gaps people won’t get from the rest of their continuous diets, that Roku hopes to be golden. And certainly, it will be an interesting year to watch if consumers react positively.