June 7, 2021
Roku is releasing rebranded Quibi content, launched an original TV series, inked a Pay 1 rights deal with Saban Films, and is bowing a weekly content recommendation show. Those are the first steps in a strategic move to increase content on The Roku Channel commensurate with audience scale and advertiser response, CFO Steve Louden told an analyst event.
Speaking June 7 on the virtual Evercore ISI Inaugural TMT Conference, Louden said the growth trajectory and the average monthly user count has increased to the point that the flexibility to spend more and access content differently is there compared to the past when Roku didn’t have the scale and the budget to do it.
“The backbone will still be general content licensing and revenue sharing,” Louden said. “But we have an opportunity now that we have more data, more scale to also improve the cost structure of things in certain cases.”
Louden said the dollars invested in content will grow because the Roku Channel doubled year-over-year in audience in 2020, and has grown twice as fast as the overall Roku operating platform.
“We haven’t given specific guidance on how that compares to the other buckets of [operating expenditures], but we’re very bullish on the Roku Channel,” he said. “Remember, the channel is a great place to aggregate a lot of content, because we are the platform owner, we have a first party relationship with consumers.”
Louden contends that Roku’s data set and recommendation algorithms could be finely tuned to structurally assist with the channel’s ability to monetize.
“Since we know who’s watching … we have an advantage over a standalone AVOD which doesn’t know who’s watching,” he said. “We can have premium targeted ads where [standalone AVOD] can’t be as effective as we can. So there’s a great flywheel there for the Roku channel: More content, more engagement, that drives more ad inventory … and allows us to grow the Roku Channel more.”