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.

Roku Channel Bows in the United Kingdom

Roku late April 6 announced the arrival of its ad-supported free The Roku Channel in the United Kingdom featuring more than 10,000 movies, TV episodes and documentaries. There are no subscriptions, fees or logins required to access The Roku Channel.

The AVOD platform is available to consumers with a Roku streaming player, Roku TV, Now TV device (manufactured by Roku) or Sky Q box.

The channel features a selection of popular global and British TV series, including titles such as “Homes Under the Hammer,” “The Commander,” “Ultimate Force,” “Fifth Gear,” “Skins” and “Britain’s Best Bakery,” alongside Hollywood movies such as Get Carter, The Wicker Man and Les Miserables.

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“With The Roku Channel we are making it easy for consumers to find great free entertainment,” Rob Holmes, VP of programming, said in a statement. “Ad-supported viewing is one of the fastest growing categories on our platform and we are excited to meet the consumer demand for free TV.”

The channel includes personalized recommendations and search capabilities on Roku and Now TV devices. Users will also find a special “kids & family” section, easy for children and parents to find age-appropriate content. There is also a character row, helping parents and kids find shows. Titles include “Bob the Builder,” “Teletubbies,” “Oddbods,” “Bernard,” “Ryan’s World Specials,” “Fireman Sam” and “Baby Einstein Classics.”

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The Roku Channel helps existing publishers on the Roku platform as well as new publishers to drive additional viewership of their content. The Roku Channel in the U.K. features more than 40 content partners, including All3Media International, EndemolShine Group, FilmRise, pocket.watch and DRG, plus Hollywood studios Lionsgate U.K. and Sony Pictures Television, among others.

beIN Sports Xtra Launches on Xumo and Roku Platforms Across Canada

beIN Sports March 9 announced that its ad-supported English-language live sports streaming channel is joining Comcast-owned AVOD platform Xumo and The Roku Channel in Canada.

beIN Sports will offer analysis from Canadian native and five-time Saskatchewan Soccer Association Player of the Year Kaylyn Kyle. The former Canadian Women’s National Team player and Olympic medalist was recently on the ground in Madrid, Spain, covering LaLiga’s El Claśico match between Real Madrid and FC Barcelona.

beIN Sports is also streaming live coverage of ongoing LaLiga, Ligue 1, Copa Libertadores, Copa Sudamericana, and Turkish SüperLig soccer.

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“It’s easier than ever to catch [soccer] action in real-time,” Antonio Briceño, deputy managing director for beIN Sports in North America, said in a statement.

Launched in 2012, beIN Sports also features wrestling, mixed martial arts (MMA), skiing and handball, among others.

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The Roku Channel Topped 56 Million Viewers in 2019

It was a banner fiscal 2019 for Roku, co-creator (with Netflix) of the subscription streaming video market. The company continues to make strides in ad-supported VOD through The Roku Channel, which ended 2019 with more than 56 million active viewers.

In the Feb. 13 shareholder letter, founder/CEO Anthony Wood and CFO Steve Louden attributed the viewer growth to expansion of the “quality and scope” of the ad-supported content, launching new subscription channels and increased investment in product and capabilities.

“We have added more than 40 premium subscription channels, launched the ‘kids & family experience,’ and now offer more than 55 live linear channels,” Wood and Louden wrote. “We also continued to expand access to studio and network movie and TV content.”

For the full fiscal year (ended Dec. 31, 2019), Roku exceeded $1.1 billion in revenue and reinforced its position as America’s No. 1 TV streaming platform by hours streamed. The company added a record 4.6 million incremental active accounts in Q4 and ended 2019 with 36.9 million active accounts. Thanks in part to strong holiday sales (and average discount pricing of 10%), player units were up 33% year-over-year.

Platform revenue increased 78% to $740.8 million. Roku added 9.8 million incremental active accounts in 2019 to reach 36.9 million at year-end. Streaming hours increased by 16.3 billion hours to a record 40.3 billion. Average revenue per user (ARPU) increased $5.19 to $23.14 (trailing 12-month basis).

Roku monetized video ad impressions more than doubled again in 2019, and nearly one in three smart TVs sold in the U.S. were Roku TVs.

“In the midst of this ongoing shift in the industry, we continue to execute well against our strategic plans by launching innovative products, being a neutral partner at the center of the streaming ecosystem, building capabilities to aggregate content and engage viewers, and further strengthening our unique advertising platform which offers superior capabilities for brands,” Wood and Louden wrote.

The executives said user engagement with the Roku platform grew as users streamed 11.7 billion hours in the quarter, an increase of 60% year-over-year. This contributed to a record 40.3 billion streaming hours during 2019, a 68% year-over-year increase.

The year-over-year growth rate in streaming hours moderated somewhat in Q4 2019 versus Q4 2018 due in part to the timing of Black Friday falling a week later in 2019 and the partial rollout of the “Are you still watching” feature, which prompts users to confirm they are watching after a period of inactivity.

Finally, platform monetization continued to increase with ARPU up to $23.14 (on a trailing twelve months basis), up 29% year-over-year, as we continued to grow video advertising impressions across the platform, including on The Roku Channel. For Q4 and full year 2019, Roku monetized video advertising impressions more than doubled year-over-year.

Regardless, with growth come additional costs. Roku generated a $17.4 million loss in Q4, compared to net income of $5.5 million during the previous-year period. The loss it expected to increase to $55 million to $60 million in the current fiscal period (ending March 31).

 

TiVo Adds Content Partners to Streaming Video Service

TiVo Jan. 8 formally announced an additional 23 new content partners for its ad-supported TiVo+ video network. The new channels join the current lineup of 26 streaming channels available to TiVo customers.

New content partners include USA Today, Cheddar, Top Stories by Newsy, Sportswire and MMA Junkie. Lifestyle channels include Condé Nast, Tastemade, Latido Music, Mobcrush and Revry.

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The Condé Nast partnership will bring programming from Glamour, Bon Appetit, Traveler, GQ and Wired, while the Tastemade partnership will bring Food, Travel and Home Design programming.

The comedy genre will expand to include “Funny or Die” and “The Chive”. TiVo+ Kids, movies and TV categories will now include “Mr. Bean & Friends,” “Kabillion,” “Law & Crime,” “American Classics,” “OMG! Network” and “Reel Truth.”

TiVo+ is attempting to join a growing ad-supported VOD market that includes The Roku Channel, Amazon’s IMDb TV, Pluto TV, Tubi, Shout! Factory TV and Crackle, among others.

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“In a world where people have more entertainment subscriptions than they can count on one hand, TiVo is working to bring everything together in one place for viewers,” CEO Dave Shull said in a statement.