Roku Acquires Quibi’s Global Content Distribution Rights

Roku Jan. 8 announced that its ad-supported branded streaming platform, The Roku Channel, will become the exclusive home to more than 75 shows and documentaries shuttered SVOD service Quibi created in conjunction with Hollywood studios and production companies. Roku acquired the exclusive global distribution rights to the award-winning shows and will make the content available for free to all Roku users.

Following an internal restructuring by Quibi, Roku acquired Quibi Holdings, LLC, the company that holds all of Quibi’s content distribution rights. Financial terms of the transaction were not disclosed.

Launched last April by DreamWorks Animation founder Jeffrey Katzenberg and eBay founder Meg Whitman, the $1.75 billion-backed service featuring short-form video no longer than 10 minutes, announced after just six months it was ceasing operations — citing in part consumer indifference.

The Quibi content includes Emmy award-winning scripted series, alternative and reality programming and documentaries featuring stars such as Idris Elba, Kevin Hart, Liam Hemsworth, Anna Kendrick, Nicole Richie, Chrissy Teigen, and Lena Waithe. In addition to the full range of titles that had previously premiered on Quibi, more than a dozen new programs will make their exclusive debut on The Roku Channel.

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The Roku Channel is the AVOD home for free and premium news and entertainment and in Q4 2020 reached U.S. households with an estimated 61.8 million people. The Roku Channel experienced rapid growth in Q4 2020 doubling household reach year over year and was a top 10 channel in both streaming hours and active accounts.

The transaction aims to deliver a distinctive array of premium content geared towards the highly coveted 18-35 age demographic, further building out The Roku Channel’s lineup of more than 40,000 free movies and programs and 150 free live linear TV channels.

“The Roku Channel is one of the largest and fastest growing channels on our platform today and we are consistently expanding the breadth and quality of our free, ad-supported content for our users,” Rob Holmes, VP of programming at Roku, said in a statement. “Today’s announcement marks a rare opportunity to acquire compelling new original programming that features some of the biggest names in entertainment.”

“Quibi championed some of the most original ideas and inventive storytelling, and I’m so proud of what I was able to create for the platform,” said Veena Sud, creator, writer, director and executive producer of the series “The Stranger.”

 

Roku, HBO Max Reportedly Near Distribution Deal

With WarnerMedia’s HBO Max SVOD’s app securing placement on Amazon Fire TV, pressure increased on Roku to make a deal — or else risk losing user streaming traffic to a rival app gatekeeper.

Now WarnerMedia and Roku are reportedly ironing out details on an agreement that could go into effect by the end of the year, according to The Desk, which cited sources familiar with the situation.

The Roku platform, which affords users direct access to myriad third-party OTT video apps, combined with Amazon Fire TV, account for 70% of all SVOD consumer traffic, according to Comscore.

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Indeed, of HBO’s 38 million pay-TV subscribers, more than 29 million have free access to Max — yet just 9 million have signed up for the platform’s app — a reality AT&T CEO John Stankey attributed in part to hang-ups with Roku and Fire TV.

“We should ask ourselves, is that friction somebody … maybe having market power above and beyond what’s reasonable for innovators?” Stankey told an investor event over the summer. “We still have work to do to educate and motivate the exclusively linear [HBO] subscriber base [about Max], and we’ll continue to work with our wholesale partners to drive these activation rates.”

The Roku platform (together with Fire TV) had been instrumental to Max precursor HBO Now acquiring 8 million subscribers. In exchange for the subscriber growth, WarnerMedia and parent AT&T allowed Amazon and Roku to share in the revenue from each new HBO subscriber derived from the respective platforms.

Roku and Amazon have similar agreements with Disney+ and NBCUniversal’s Peacock streaming services, among others.

For Max, WarnerMedia reportedly wanted new subs to access the platform directly via a standalone app. It also wanted to reduce the revenue share. Both parties have now resolved fiscal differences for the Max SVOD platform, while negotiations continue for the pending ad-supported Max option rolling out in 2021, according to The Desk.

Indeed, Max AVOD would compete with The Roku Channel, an ad-supported streaming platform with 43 million monthly average users through the second quarter. Roku wants third-party AVOD services such as Max to set aside a certain amount of ad time for its own advertising commitments.

 

Roku: 20 Million Households Streamed Election News on Platform

SVOD pioneer Roku Nov. 18 disclosed that households with an estimated 20 million people streamed election news across the platform’s advertising-supported news channels, including directly on The Roku Channel. A nationwide survey of more than 2,000 U.S. adults, conducted by The Harris Poll for Roku prior to the elections, found that more than 8 out of 10 (83%) surveyed likely voters reported being streamers.

“TV streaming democratizes access to content and nowhere have we seen this trend come into play more than with the ability for millions of Americans to access free news at their convenience via their streaming platform,” Ashley Hovey, director of AVOD for Roku, said in a statement.

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On Election Day in particular an estimated 12 million viewers streamed their news on the Roku platform for free. More than half of those streaming news on the Roku platform on Election Day tuned directly to The Roku Channel from partners including ABC News Live, NBC News Now, Cheddar, and the Spanish language América Tevé. Total streaming hours of The Roku Channel’s live linear programming increased more than 500% on Election Day compared to the prior day, breaking all previous single day records for live linear streaming hours on the Roku platform.

The majority of the households that streamed news across the Roku platform also skewed younger with nearly two-thirds (62%), including people in the coveted 18- to 49-year-old advertising demographic.

This data mirrors the broader election year trend reported by Nielsen, which found a significant change in how Americans consumed Election Day news in 2020. According to Nielsen, linear viewership dropped 35% on Election Day compared to 2016, while streaming increased by 499%.

“The desire to access live and breaking news is no longer holding audiences to traditional pay TV the way it once did,” Hovey said. “Millions of Americans have now discovered new ways to access quality news programming for free, which we believe will only further the migration towards a streaming-first television world.”

Roku Swings to Q3 Profit as Subs, Streaming Hours Increase

Roku continues to fire on all cylinders despite, and because of, the ongoing pandemic. The Los Gatos, Calif.-based streaming media software manufacturer and ad-supported VOD platform operator Nov. 5 reported third-quarter (ended Sept. 30) revenue of $452 million, up 73% year-over-year from $261.2 million a year ago.

Roku platform revenue increased 78% to $319 million, from $184.3 million. The company posted a profit of $12 million, compared with a $26.5 million loss during the previous-year period.

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The company added 2.9 million incremental active accounts in the quarter to reach 46 million. Streaming hours increased by 200 million hours over last quarter to 14.8 billion. The Roku Channel reached U.S. households with an estimated 54 million people.

“As the ongoing COVID-19 pandemic continued to accelerate the
shift of viewing away from traditional linear and pay TV, we continued to invest in competitive differentiation and execute well against our strategic plan,” founder/CEO Anthony Wood and CFO Steve Louden wrote in the shareholder letter.

The Roku Channel, Amazon Fire TV Partner, Consolidating Streaming Video Influence

The Roku Channel and Amazon Fire TV have inked a distribution partnership affording the former’s 100,000 ad-supported content titles and 115+ live TV channels onto the Fire TV platform. This includes Fire TV smart TVs, soundbars and streaming devices with Alexa voice commands, according to a blog post.

On the surface, the partnership would seem to make little sense considering the competitive business models. The Roku Channel, which launched in 2017, has about 43 million registered users. Combined with Fire TV’s 40 million active users, the two platforms represent gateways to 70% of the domestic streaming media device market, according to Comscore.

“We’re building on our commitment to make The Roku Channel even more accessible by expanding onto [third-party] streaming devices,” Rob Holmes, VP of programming and engagement at Roku, said of the Fire TV deal in a statement.

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The Roku Channel typically operates revenue-sharing agreements with content holders. The Roku platform, which generated 69% of Roku revenue in the most-recent fiscal period, affords users access to third-party SVOD services such as Netflix and Disney+. Roku is likely splitting ad-revenue with Amazon in order to put The Roku Channel onto Fire TV, according to observers.

At the same time, Fire TV does not allow access to its third-party SVOD services directly via Roku, despite the fact Amazon’s Prime Channels platform (featuring third-party SVOD services) is available on Roku.

This means that Roku users wanting to stream services such as Showtime OTT, Starz, Epix or HBO on their Fire TV, can do so only by subscribing to those services directly through the Roku platform.

It’s a similar situation HBO Max finds itself in. WarnerMedia’s high-profile SVOD platform is not available on Roku or Fire TV. NBCUniversal’s Peacock just inked a deal with Roku, which should significantly enhance its access to OTT video consumers.

“An expanding and increasingly engaged audience makes The Roku Channel a more attractive place for content owners to share their series and films,” wrote Adam Levy with The Motely Fool. “More content makes it more attractive to viewers, creating a virtuous cycle for Roku.”

Reports: AVOD Revenue to Grow 25% in 2020

Subscription streaming video’s counterpart, advertising-supported VOD, continues to gain traction among consumers — and advertisers. New data from eMarketer suggests AVOD revenue will grow more than 25% this year compared to 2019.

The AVOD market, which is spearheaded by The Roku Channel, Disney-owned Hulu, NBCUniversal’s Peacock, Redbox TV, Amazon’s IMDb TV, ViacomCBS’s Pluto TV and Fox Corp.’s Tubi, among others, saw ad revenue skyrocket 31% to $849 million in the most-recent quarter, according to MoffettNathanson Research.

“AVOD advertising benefitted from heightened usage and a mix shift in advertising budgets to OTT platforms, growing sizably in the quarter,” senior analyst Michael Nathanson wrote in a note.

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Speaking Aug. 20 on the DEG: The Digital Entertainment Group Mid-Year 2020 Digital Media Entertainment Report webcast, Nathanson called AVOD the underreported streaming video story.

“That 28% of streaming minutes is where we think the streaming wars are actually happening,” Nathanson said.

With many of the AVOD players owned by major media companies, much of the ad growth would appear to be due to shifting third-party ad dollars from linear TV to connected televisions.

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But with four of the five AVOD platforms owned by major media conglomerates, some of this growth is likely coming from reallocated TV spend. eMarketer contends the 31% rise in AVOD revenue among the top platforms compares with an estimated 28% decline in national broadcast and cable TV ad spending in Q2, according to Nathanson.

Eric Haggstrom, forecasting analyst at Insider Intelligence at eMarketer, believes that while marketers warm to AVOD, much of the revenue revolves around media giants pushing advertisers to proprietary streaming platforms.

“Some advertisers who bought ads in the upfronts are shifting money within the same media company to streaming services,” Haggstrom said.

Indeed, Tubi earlier this year added all episodes of Fox’s “Gordon Ramsay’s 24 Hours to Hell and Back,” in addition to 300 hours of separate Ramsay content, which includes “Hell’s Kitchen,” “Kitchen Nightmares” and “The F Word.” Tubi also added Fox’s music competition show “The Masked Singer.”

“Making this show available on Tubi alongside Gordon’s other series, will only grow his footprint while also further promoting his programs on Fox,” said Rob Wade, president of alternative entertainment and specials at Fox Entertainment.

Roku Saw Record Q2 Digital Movie, TV VOD Transactions; CFO Steven Louden to Continue

With more and more households streaming video, over-the-top device/platform pioneer Roku is reaping the benefit, helping consumers adopt Internet-delivered content, including movies and TV shows.

San Jose, Calif.-based Roku Aug. 5 announced it was the No. 1 connected device based on hours streamed for Disney+ in the week following the movie release of Hamilton, according to Comscore. Digital movie and TV rentals/purchases hit an all-time high in the second quarter, ended June 30, as direct-to-home feature movies Scoob! and Trolls World Tour helped more than double year-over-year subscriptions through “Roku Pay,” the company’s integrated billing platform.

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Longtime CFO Steve Louden, who earlier announced he was leaving to relocate in Seattle, Wash., is staying in his position and will telecommute.

Steve Louden

“Steve has proved that he is more than capable of performing the CFO role while residing in Seattle,” Woods wrote. “Hence, we are delighted that Steve will be staying on as Roku’s CFO and we have ended the search for his successor.”

Meanwhile, active account growth accelerated 41% year-over-year, with accounts topping 43 million, driven by sales of both players and Roku TV models. Player unit sales increased 28% led by growth in the U.S. and in certain international markets. Notably, existing Roku users added almost three million new Roku streaming devices to their accounts during the quarter. Roku TV sales accounted for one in three smart TVs sold in the U.S.

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The Roku Channel more than doubled its reach in the U.S., with the ad-supported VOD service watched by households with an estimated 43 million residents.

“We believe the pandemic has accelerated the long-term trend toward all TV being streamed,” founder/CEO Anthony Wood and CFO Steve Louden wrote in the shareholder letter.

Roku tripled its net loss to $42.2 million, from $10.4 million during the previous-year period — due in part to 36% increase in R&D costs; 75% uptick in sales and marketing; and 56% spike in general and administrative costs. Revenue increased 42% to $356.1 million, from $250.1 million a year ago.

The executives declined to give guidance on the current fourth quarter due to the increasing prevalence of COVID-19 infections around the world and the potential for disruptions and changes to historical consumer behavior and spending patterns during the back-to-school and holiday seasons.

“Q4 is the seasonally largest quarter for Roku and there is a wide range of potential outcomes given increased consumer interest in streaming on one hand, and the possibility of retailer, supply chain and advertising constraints at critical times on the other,” Wood and Louden wrote.

 

UPDATE: Amazon Prime Video Eyeing Live Television — a Non-Starter

Amazon Prime Video was reported to be the latest SVOD considering offering ad-supported live television to subscribers — similarly to Hulu with Live TV and online TV services such as Sling TV, YouTube TV, The Roku Channel and AT&T TV Now, among others.

An Amazon representative June 24 disclosed that reports about the e-commerce behemoth recruiting people on social media with live TV experience, including those with executive experience launching online TV, have nothing to do with launching a proprietary online TV platform.

“There is nothing new here as we already offer hundreds of live TV stations around the world today,” the rep said in an email.

The rep said job postings referenced are for the teams currently supporting third-party live TV stations via Prime Video Channels, and include linear channels such as CBS All Access and Showtime in the U.S., Stack TV in Canada, Eurosport in Germany and U.K., among others.

“Customers who sign up for these type of channel subscriptions already get access to their 24/7 station stream,” the rep said.

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The confusion started when media reports surfaced about LinkedIn post such as this: “We are seeking an experienced product manager for the Prime Video Linear TV team to redefine how customers watch 24/7 linear broadcast TV content,” read the listing. “Linear TV enables customers to watch 24/7 streams of their favorite TV stations airing programs including sports, news, movies, award shows, special events and TV shows.”

Prime Video heretofore has avoided live TV with the exception of its “NFL Thursday Night Football” and English Premier League soccer webcasts, preferring SVOD and transactional VOD and third-party OTT platforms via Prime Channels.

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Online site Protocol, citing personnel familiar with the situation, had reported Amazon was seeking to offer individual live-TV channels as opposed to the conventional bundle. Indeed, when Dish Network in 2015 bowed the first standalone online TV platform, Sling TV, it was able for the first time to market ESPN without the traditional pay-TV bundle. ESPN at the time was the most expensive pay-TV channel offered.

Sling TV, which once led all platforms in subscribers, has been steadily losing subs. And Sony Interactive Entertainment in January shuttered PlayStation Vue, citing a lack of consumer demand.

“Unfortunately, the highly competitive pay-TV industry, with expensive content and network deals, has been slower to change than we expected,” Sony said in a statement.

Kids YouTube Channel CoComelon Available on Roku Channel

Kids YouTube channel CoComelon is now available on The Roku Channel, Roku and Treasure Studio announced.

The channel offers a selection of children’s songs and videos that help preschoolers learn letters, numbers, animal sounds, colors and more. Available through the Kids & Family experience on The Roku Channel, the launch marks the first time CoComelon programming will be available outside of YouTube.

“At CoComelon, we’re driven by being able to engage families with entertaining and educational content that makes universally relatable preschool moments fun,” Jay Jeon, creator/founder of Treasure Studio, said in a statement. “We are thrilled to launch with Roku today to make our popular programming available to Roku fans everywhere. Roku shares our deep commitment to creating positive content environments for children and brings a unique ability to engage and promote programming to audiences especially within The Roku Channel. This partnership is an important component of our strategy to be everywhere our audience is today.”

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“CoComelon is beloved by tens of millions of children around the world and is a natural fit for our growing selection of content available to the millions of families who are increasingly turning to The Roku Channel every day for both entertainment and educational content,” Rob Holmes, Roku VP of programming and engagement, said in a statement. “CoComelon joins a robust line-up of children’s programming within our Kids & Family experience and we could not be more excited to welcome their incredible streaming content to The Roku Channel.”

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CoComelon videos include “Bath Song,” “Yes, Yes Vegetables,” “Baa Baa Black Sheep,” “Wheels on the Bus,” and “Baby Shark Submarine,” which have amassed billions of views.

Kids & Family on The Roku Channel, which launched last fall, offers more than 20,000 TV episodes and movies.

Roku Says Pandemic ‘May Accelerate’ Platform Growth

Nothing like a global pandemic to invigorate business — and costs.

Streaming media device pioneer Roku May 7 said most business-wide metrics surged during-and-after the first quarter, ended March 31. Active accounts grew about 38% to 39.8 million compared to the previous-year period at 29.8 million accounts — driven by 70% year-over-year increase in new accounts.

Streaming hours rose by about 80% year-over-year, driven by an increase in streaming hours per account of approximately 30%. The company said pandemic-associated stay-at-home orders and increased unemployment appear to have accelerated the shift from linear TV viewing to streaming during the past few weeks.

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Roku cited Nielsen data indicating primetime linear viewing among adults 18-34 from March 16 to April 19 decreased 18% year-over-year, with about 50% of TV content consumption streamed.

In a shareholder letter, founder/CEO Anthony Wood and CFO Steve Louden said player sales increased 25% year-over-year. Roku TV models now account for more than one in three smart TVs sold in the U.S. and more 25% of smart TVs sold in Canada. Streaming hours increased by 1.6 billion hours to a record 13.2 billion.

“[We] have benefited from a surge in OTT usage,” Wood and Louden wrote. “Current events have increased overall demand for both players and Roku TV models around the world.”

Yet while net revenue grew 55% to $321 million, and platform revenue increased 73% to $233 million, costs ballooned 76% to $196 million, driven in parts by sales and marketing. Net loss skyrocketed more than 500% to $55 million from $10 million.

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Wood and Louden said Roku is working with retail partners and TV brands to plan for the rest of the year — given the possibility of restrictions or changes in consumer shopping patterns during traditionally strong sales periods such as Back-to-School, Black Friday and Christmas.

“Over the longer term, not only do we believe that the trends that we expect to define the streaming decade will remain intact, but changes brought on by the COVID-19 pandemic may even accelerate Roku’s path to greater platform scale,” they wrote.