January 4, 2019
Following in the footsteps of its rival Amazon, Roku announced that users will be able to buy pay-TV subscriptions through its streaming service, The Roku Channel, beginning in late January. That mimics Amazon’s sale of access to HBO and other premium channels through its Prime Video platform. Roku’s offering will include Showtime, Starz and EPIX among others. The new feature, which replaces one in which Roku acted as a portal to outside services, will also be financially favorable for the company.
The Wall Street Journal reports that Roku hasn’t yet inked a deal with Netflix or Hulu for the new feature. Roku, which went public in 2017, has a larger market share than Apple TV and Amazon Fire TV, according to eMarketer. The company “takes a cut of revenue for subscriptions sold on its platform or reaps a bonus for each new subscriber that signs up for pay-TV services.”
Other revenue sources include advertising on The Roku Channel and “a recently introduced marketplace that allows TV networks to sell spots that target specific audiences.” In Q3, Roku’s revenue broke down to $73.3 million for its hardware business and about $100 million for advertising/subscription.
Opinion is mixed on what premium channels have to gain by selling subscriptions to their services through third parties like Roku. BTIG media analyst Brandon Ross said that, “channels such as Showtime and EPIX might see some short-term benefit in the form of a larger customer base and higher customer retention.” But Ross pointed out the downside that, “in the long run, allowing a third party to come between their direct relationships with subscribers could hurt their ability to become successful and independent video-streaming services.”
“If they’re going to truly become direct-to-consumer platforms, they shouldn’t be wholly reliant on third-party resellers,” he said.
In its press release, Roku described the details of the new features, stating that, “in addition to 10,000+ free ad-supported movies and TV episodes already available, The Roku Channel will soon offer users the option to add 25+ Premium Subscriptions … discover new services from Premium Subscriptions partners, browse their entire catalogs and then sign-up for at least a seven-day free trial using their existing Roku account information.”
It added that, “search within The Roku Channel will be expanded, allowing users to easily search for keywords within the channel,” and that users will also benefit from a single destination for viewing along with “a single monthly bill and simple account management.” Further, it added that Premium Subscriptions are enabled with a one-click sign up, with customers “using their existing Roku account information once they visit the subscription page.”
Also new will be a feature to the Roku iOS and Android mobile apps enabling uses to watch content from The Roku Channel without a Roku device. Users will “be able to start a video on a Roku player or Roku TV and pick up from where they left off while on the go.” The Roku mobile app update will begin its rollout in late January.