When the Roku Channel launched five years ago, it was a minnow in a sea of streaming giants.
The free, ad-supported service started out small and offered nearly 500 hours of licensed programming mainly featuring older films such as 1984’s The Karate Kid and the comedy Legally Blonde.
The streaming channel seemed like a footnote for the most part to the San Jose company known for providing software and devices that help consumers navigate Netflix, YouTube, and other streaming services.
No longer. According to Activate Consulting, Roku Channel is now the fifth most popular streaming service in the industry with 80,000 on-demand shows and films, more than 200 live TV channels, and an estimated 70 million viewers in the US. And to get more exposure, the channel is making a big push into original programming and plans to develop more than 50 original and unscripted shows over the next two years.
Roku’s deeper investment in original programming follows Netflix’s Playbook, which began as a distributor for older, licensed films and television shows. Then it grew into a large library with its own award-winning content.
On the way to becoming a content producer, the Roku Channel has expanded its presence in the Los Angeles area. Roku’s Santa Monica team doubled to more than 200 people in 2021.
To do justice to its larger workforce, the Roku Canal is moving to larger excavations earlier this year. The company, which previously had an office in the Water Garden, Santa Monica, has rented 72,019 square feet in the Colorado Center, according to LA Realty Partners.
“We have actually outgrown the office we left before the pandemic and need to open a new office,” said Rob Holmes, Roku’s vice president of programming. “It just reflects the size of Roku’s resources and the nature of the investments in the LA area.”
Roku ventured into the original programming when it acquired a library of more than 75 programs from Quibi. The late Hollywood streamer, led by studio mogul Jeffrey Katzenberg and tech veteran Meg Whitman, wanted to revolutionize entertainment with videos that were 10 minutes or less and featured A-list celebrities. The start-up threw a lot of money into its productions, spending up to $ 100,000 a minute. However, the app could not reach a sufficiently large audience and was closed in December 2020.
Many analysts believe Roku bought the Quibi library at a huge discount – one person who was familiar with the deal and refused to be named said the rights were sold for less than $ 100 million.
Roku’s vast distribution network helped some of the former Quibi shows, now known as Roku Originals, thrive on the new platform. Among them is “Die Hart,” an action comedy starring Kevin Hart graduating from an action hero training school that was quickly renewed for a second season on the Roku Channel. The thriller “Most Dangerous Game”, in which Oscar-winning actor Christoph Waltz is under contract for a second season, has also been renewed.
“To be able to tell producers, talents and creators that you can get an audience the size and scale that Roku can offer is a great pleasure because one of the most important things everyone wants [to know] When they’re doing a show, ‘who’s going to see it and how do I make sure a lot of people see it’, “said Colin Davis, director of original scripting and former senior content executive at Quibi.
Roku also develops non-scripted shows in categories such as competitions, lifestyle, travel, food and pop culture, adventure and exploration, and scripts and comedies. According to a person familiar with the Roku Channel’s business and with no voiceover, estimated budgets for scripted shows range from $ 500,000 to $ 2.5 million for half-hour episodes and $ 2-4 million for one hour episodes.
“We have platform-wide data that shows us what types of content the people we’re targeting are seeing, and by using that first-party data, we can create a kind of sandbox where we can plan where we should develop and up and running, ”said Brian Tannenbaum, director of original alternative programming for the Roku Channel.
Last year Roku bought This Old House, including its home improvement programs and television studio, and signed a deal with Saban Films to stream its films on the Roku Channel after they hit theaters.
The company has already signed development contracts with the production companies Hello Sunshine and Westbrook.
The Roku Canal is only part of Roku’s overall business. Since its inception, Roku has sold televisions – hardware that users plug into their televisions to access Roku’s software that connects them to various streaming services in one location. Roku also licenses its software to smart TV manufacturers and is the most popular television operating system in the United States
Roku receives some of the subscriptions or programs sold through its service and also makes money selling ads on its platform and free streaming channel.
“The reality is that you can’t be a successful streaming service in the US today if you’re not on Roku,” said Jason Helfstein, an analyst at Oppenheimer & Co., who rated the stock as “Outperform.” “That gives them the power to make sure they get some kind of fair economy from all of their content providers.”
In fact, Roku’s profits rose to $ 68.9 million for the third quarter, up from $ 12.9 million last year on sales of $ 680 million. Sales increased by 51% compared to the previous year, partly due to higher advertising sales.
Still, Roku’s share price has plummeted over the past year, which analysts attribute to the global mail order challenges that manufacturers are facing. Roku’s share price, which closed Tuesday at $ 185.70 per share, is down 54% year over year.
The station’s rapid growth made it an attractive option for the producers of a Christmas movie based on the discontinued NBC TV series “Zoey’s Extraordinary Playlist,” a comedy about a technician who hears people sing their innermost feelings.
The new film, titled “Zoey’s Extraordinary Christmas,” premiered last month and was the most viewed film on the Roku Channel on the opening weekend.
“He did incredibly well,” said Jim Packer, president of global TV and digital distribution for Lionsgate, which produced the film. “I think it was a very good move for both companies.”
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