Starting today, Roku is alerting production companies and individual creators that it’s looking for content. Roku is said to be prioritizing comedies and dramas, with little regard to runtimes. Roku is open to half-hour, hour, and feature-length blocks equally, though currently, Roku’s preference is running toward “serialized content.” Those interested in bringing out the next “The Masked Singer,” however, may find a home with Roku as well; Roku is also open to unscripted shows including lifestyle and music programs.
Roku’s prepared to put its money where its mouth is as well. According to people familiar with Roku’s plans, the company is ready to pay as much as $750,000 per unscripted episode of content, and up to $5 million per scripted episode. Objectively, that’s quite a bit, but with reports pegging an episode of “The Mandalorian” at $15 million, we can imagine we won’t be seeing many spaceship battles on the platform.
Roku has a positively massive user base, with 155 million people currently possessing a Roku device for streaming content. (The Roku Channel is available on non-Roku devices as well.) Drawing users to its own content helps cement the company’s moat. Roku’s advertising setup underscores that point well; when users watch non-Roku content on a Roku device, the company sells about a third of the advertising that runs during the programs. Money from ads on Roku-exclusive programming goes entirely to Roku.
The company brought in $1.3 billion last year from its “platform business,” which includes its internally-sold advertising, which makes it clear that there’s a lot of cash at stake. There’s also room for improvement. Roku’s vice president of programming, Rob Holmes, pointed out that Roku gets about 3.5 hours of viewing per user per day. He elaborated that, since the average household watches 7-8 hours per day, that means more time that Roku can get under its platform.
Of course, it’s likely a bridge too far to suggest that Roku can capture all that time. Roku doesn’t have near the original content required for that. Even if it did, once Roku ran out of originals, at least some users would migrate to other platforms. Churn is a permanent part of this industry, though it impacts some platforms more than others. However, the more original content Roku has, the more likely it is to capture viewers for that content, and in turn, triple its ad revenue per user.
Still, this is a big step forward for Roku. With that kind of original content, it can put itself on the same level as some of the biggest streaming platforms around. Offering that content up for free with ad support only helps matters, especially as other providers raise prices. Some of Roku’s content will do better than others, certainly, but if Roku can manage to strike gold by bringing out one of the next big shows, that will only help. The last few years have demonstrated the intense value of original content, especially when it’s sufficiently original to draw viewers. Roku may be on to an absolute winning strategy here, and one that could pay dividends for some time to come.
The Roku Channel is a free live TV streaming service that provides 270+ live linear streaming channels and more than 80,000 free movies and TV shows. The library contains entertainment from several different decades, including some major hits.
The service also made a splash by the acquisition of the Quibi library, now presented as Roku Originals. More original content is set to follow.
Users can add premium subscriptions to services like Showtime, STARZ, and AMC+ that can be accessed within the Roku Channel ecosystem.