Finally, Someone’s Doing Something Right

There’s been so much negative news regarding the world of streaming media of late that it’s sometimes difficult to actually find nuggets of emcouragement.  My bad that this one that dropped the week before last wasn’t highlighted in a musing before this.  But yes, there is actually a new kid on the Nielsen block that has reason to break out the bubbly, per Rick Porter of THE HOLLYWOOD REPORTER (nice alliteration, BTW):

The Roku Channel is the latest free streamer to get enough viewer attention to make Nielsen’s monthly platform rankings.

The streaming device maker’s programming outlet joins fellow FAST services Tubi and Pluto TV in Nielsen’s Gauge snapshot for May. The Roku Channel gathered 1.1 percent of all TV use for the month, tying NBCUniversal’s Peacock in rankings of individual streaming services. Tubi had 1.3 percent of TV use in May and Pluto TV, 0.9 percent.

Roku has been around for more than a decade, a name one would be more likely to be familiar with for its dongles and other connectivity widgets so that you could cast icontent from your device to a larger screen.  In the world of Nielsen measurement, those larger screens are more likely to be classified as connected–ones rhat can be measured by their measurement panel.  That, coupled with another item of note which DEADLINE’s Katie Campione cited in her write-up, distinctly benefitted Roku’s chances for breaking through:

(S)treaming usage increase by 2.5% from April to May, and streaming’s share of overall TV usage jumped from 34.0% to 36.4%. Nielsen incorporated a technical enhancement into its measurements that allows it to account for streaming via cable set-top boxes, though the company says this only made up about half of the increase in streaming.  

Porter offered further clarification:

Set-top box streaming previously fell all under the “other TV use” category, but starting in May programs identified as streaming originals are attributed to the streaming category, as well as the individual platform.

And Roku is now increasing what it defines as streaming originals, an effort they kickstarted when they began to pursue platform monetization more aggressively in 2019 as a way to broaden their efforts beyond mere hardware sales (if that sounds like a page from Apple’s playbook, you wouldn’t be wrong) and was kickstarted when Roku acquired the rights to the ambitious but ill-timed programming efforts of the far-from-lamented Quibi launch at the outset of the pandemic, a collosal failure that never even made it into 2021.  Roku subsequently has increased the number and breadth of its original programming, from the critically acclaimed mockumentary WEIRD: THE AL YANKOVIC STORY, to unscripted originals from such cable alums as Emeril and Martha Stewart, and plenty of acquired series with strong passion bases like ALIAS and ARMY WIVES that have outlived their usefulness on their respective former cable homes.

And early last week Roku also announced that they are throwing their hat into the ring of what has been acknowledged as the holy grail for media of any kind–live sports, per TechCrunch’s Lauren Forristal:

Roku announced its first live sports rights package on Tuesday, marking a notable move for the streaming service as it steps into the highly competitive world of live sports streaming.

Roku and CBS Sports struck a deal to become exclusive U.S. media partners for Formula E, the motorsport championship series for electric racing cars. Starting in January 2024, the Roku Channel will be the new streaming home for live and on-demand Formula E races as well as highlights, replays, race previews, the Formula E docu-series “Unplugged” and more.

The Roku Channel will air 11 races per season, whereas CBS will stream five races per season on linear TV and Paramount+. All races will be available through Roku’s recently launched sports tab.

It’s both apropos and a sign of the times that an expansion of the growing global phenomenon that is formula racing, which Netflix’s success with DRIVE TO WIN seeded greater awareness and appetite for in the U.S. but somehow failed to be an entry point into live content they were willing to roll the dice with, will be happening on a platform like Roku which is now a legitimate competitor to it, particularly in the ad-supported area where Netflix has been spending their time playing catch-up in, with far less documented success to date than Roku has been able to report.  If indeed we are headed toward an electric-centric world of automobile purchases (at least, so say the Democrats), the awareness and appetite for cars that don’t have to make pit stops to fuel up will only increase.  Much like the addition of the pitching clock to major league baseball, it speeds up the events and eliminates down times, because there’s only such much interesting banter from drivers and mechanics over whirring engines that can sustain interest over time.

And even the notoriously dour James Brumley of THE MOTLEY FOOL conceded that these revelations are worthy of his amd his followers’ attention:

Roku’s (ROKU 1.52%) highest-growth days may be in the past. But, there’s some hope the company may be able to reinvent itself as a successful streaming service like Netflix (NFLX 2.86%) or Comcast’s Peacock. 

It’s still too soon to call it a game-changer. After all, the company remains in the red, and its revenue growth is stagnating. Maybe that’s a temporary problem linked to economic weakness. Maybe not.

For would-be investors, though, it’s a new metric worth watching all the same.

Since the company turned up the heat on its platform monetization efforts back in 2019, however, it seems Roku has had a little more success injecting ads into video streams delivered via The Roku Channel than it seems.

In retrospect, though, perhaps nobody should be too terribly surprised. As the company’s first-quarter letter to shareholders plainly explains:

…[its] unique advantages have helped drive The Roku Channel’s incredible growth across the platform in the U.S., Canada, Mexico, and the U.K., with Q1 Streaming Hours up 65% [year over year]. The Roku Channel remains a top-five channel on the platform by both Active Account reach and Streaming Hour engagement.

Last quarter’s active accounts of 71.6 million was a 17% year-over-year improvement, while The Roku Channel’s 25.1 billion streamed hours in Q1 represents 20% more hours than it served up in the comparable quarter a year earlier.

Plus signs when it comes to viewership trends.  Talk about Throwback Thursday, or whatever day of the week that outdated practice now takes place.

And unlike a service like Peacock or Paramount+(aargh)SHOWTIME or even Hulu that often serve as a VMPVD for live streaming of broadcast and cable networks, Roku’s aggregates are predominantly made up of content you can’t find anywhere else, at least easily.

But before you start whipping out your checkbook, or typing in your trading credentials, Brumley strikes a cautionary tone:

Notice that while revenue growth has been nonexistent of late, active account growth and streamed-hours continue to make forward progress at the same pace they made before and during the pandemic.

It’s not a panacea — at least not yet.

As already noted, Roku is back in the red. Sales, marketing, and research and development spending is more than wiping out whatever of the platform’s gross profit the company’s able to produce. The current business model’s math just doesn’t work.  

The Roku Channel itself is now too big to simply ignore as a potential stand-alone profit center, though, even if Roku itself isn’t serving up any more details than are being laid out here.

Pluto TV’s average monthly per-user revenue is on the order of $2, while Comcast‘s is closer to $6 or $7 per month (and some are suggesting the number is closer to $10), Walt Disney‘s Disney+ boasts average monthly revenue per user of $4.44, and Hulu’s is nearly $12. If Roku can even get The Roku Channel’s comparable figure up to a respectable fraction of those numbers and at the same time preserve its existing business promoting other streaming services, that may well be enough to push the company back into the black.

A glimmer of hope merits a place on your watch list.

Considering the balance of media, and, for that matter, real world news items that have been dropped in the same time frame as these revelations, a glimmer of hope merits a place on any list.

So maybe it’s a bit premature to break out anything expensive and alcoholic as we offered at the outset of this musing.  But this kind of momentum is at least worthy of some sushi, Roku.

Until next time…


1 thought on “Finally, Someone’s Doing Something Right”

  1. Hi there just wanted to give you a quick heads up
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