Why Roku Is Doubling Down on Free Content and Linear Channels in an On-Demand World

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In a world dominated by SVOD services like Netflix and Amazon, Roku’s VP of programming Rob Holmes believes ad-supported content is still a big value play for companies fighting for their share of eyeballs. “Nine out of 10 people are looking for free content on our platform,” Holmes told TheWrap.

With over 5,000 OTT apps available on its service to analyze, Roku is a company with a strong understanding of the OTT ecosystem. The company has evolved from being a hardware company making a majority of its money from the sale of streaming boxes, to growing an advertising business whose revenues now outpace hardware sales.

Part of this achievement comes from the company’s investment in a Roku-branded ad-supported streaming service, The Roku Channel, which the company plans to dedicate more resources to throughout this year. That content expansion has led to hiccups, like Roku’s decision to add conspiracy theorist Alex Jones’ InfoWars channel to the site in January — which the company reversed one day after launching, citing objections from “concerned parties.” (Holmes declined to comment further on the InfoWars case.)

Also Read: Latest Sign the Cord-Cutting Revolution Is Over: Roku Users Watch 3 Hours of Content Per Day

We caught up with Holmes to discuss The Roku Channel’s content strategy and emerging trends within the OTT landscape, such as the demand for ad-supported and free linear content.

1. With over 5,000 OTT apps available on the overall Roku platform, are you seeing any trends emerge?

I think ad-supported is one of the big trends for us. AVOD is really a value play where many users are looking to save money in their overall entertainment spend and so they’re cutting the cord. They’re moving to a virtual MVPD and as part of that they’re also looking for great free options, so we’re seeing a ton of growth in the ad-supported segment.

You know, that’s one of the reasons why we actually launched The Roku Channel with a focus on ad-supported content, because we recognized the importance of that content to our users. Nine out of 10 people are looking for free content on our platform and we saw a friction in discovering great free content on the platform — there’s a lot of it, but it’s in a lot of different places — so the primary motivation of The Roku Channel was to make it really easy for users to find great free content. And, if anything, that’s really been driven by that — user desire for and that strong growth in ad supported viewing.

2. How many people are looking for subscriptions?

You know, certainly users are using all sorts of different content on the platform so subscriptions are a part of it as well. One of the ways that we’ve sought to play into that is with the addition of premium subscriptions and recognizing that users want to make choices about the content and they can access.

And so we’re trying to bring that into The Roku Channel and make it easy for them to add on subscription content when they’re looking for it. That’s a part that we’re still in the midst of rolling out and it’s still pretty early days for us, but we’re excited to bring that additional content and that convenient experience to The Roku Channel for users.

Also Read: Roku’s Stock Rockets 25 Percent on Massive Increase in Streaming Hours

3. In addition to offering subscription services on The Roku Channel, the company has also experimented with streaming linear content from its ad-supported platform. Is this an area the company plans to continue to invest in?

Linear is still a valid use case in the OTT world. Some people think about linear as part of the old world — as part of the cable world — and therefore perhaps not something that belongs in OTT. But we think it’s all a mix and linear is definitely something that we’ve continued to expand. In the fall, we launched linear with a couple of digital verticals on The Roku Channel where we included an entertainment vertical and sports vertical as well with folks like Stadium Sports.

I do think there’s a broader statement about linear overall, which is: in a world of infinite choice, which we’re quickly approaching here in terms of all the content that’s available, it’s actually hard for a user to make all those choices. There’s some challenges from a consumer standpoint, it’s sort of “paradox of choice,” as some call it. And one of the things that linear does really well is simplify the decision for a user because they can say, “Look, I just want to watch something funny. No, I want to be informed. I want to be entertained.”

A linear channel is a brand that in success represents something for viewers — “This is a place I go to watch funny things, this is the place I go to watch news” — which are probably less sensitive to the specific thing that they’re watching at any given time on linear so long as that brand is satisfying their needs.

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4. The first slate of linear channels launched on The Roku Channel were from news-focused companies like ABC News and Cheddar. Why was news such a heavy focus?

I think news brought a couple of really great things to us. It made it clear where you could find great ad-supported news on the Roku platform. We’ve always had actually a really nice ad-supported news offering, but it was embedded across a number of different channels, some of which are very prominent and well-known brands, but some of which aren’t. We wanted to make that a really easy search for the user, just come to The Roku Channel, we’ve got a couple of them for you.

Also, when users switch from cable to OTT, news is one of the things they want to make sure they have access to. So making it clear to them through our partnership with ABC News and others that there’s always going to be a great source of news for them is also very helpful for users as they think about which platform they want to adopt in the OTT world.

Also Read: Roku Pulls Alex Jones’ InfoWars Channel After Just 1 Day

News also gives us a constant new source of content. If you think about movies and TV in OTT, they largely refresh on a monthly basis. So if you’ve got news content coming in every day — obviously the news is different every day — it gives people a reason to come in and check and see what’s going on and then go on to look at something they might want to watch for the rest of the day or the afternoon.

5. What’s next for Roku in terms of aggregating live content to its platform?

We are always thinking about what great content is out there that we could make available for our users in an easy-to-find fashion. We really are driven by responding to our users and helping to make it easier for them to navigate the OTT world. So as we see appetite for more of that kind of content, you can bet we’re going to be out there trying to find it.

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Apple’s Streaming Video Service Could Hit 100M Subscribers In 5 Years – Analyst

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Apple’s hotly anticipated entry into video streaming, which is it likely to unveil March 25, will ramp quickly and could rack up 100 million subscribers in just five years, according to a forecast from Wedbush Securities analyst Daniel Ives.
In a…

How Digital Video Publishers Are Racing to Take Advantage of Connected TV’s Growth in Popularity

Read on: TheWrapTheWrap.

Digital brands are learning that while mobile is still a great place to reach a lot of eyeballs, consumers are spending more time and longer periods of that time streaming video content on their connected TVs (CTV).

Conviva estimates that CTVs had a 148 percent growth in plays last year, outpacing mobile, which saw a more modest 94 percent growth. While mobile is still a strong choice for watching content on the go, connected TVs accounted for a 56 percent share in viewing hours for 2018 — an increase of 9 percent from 2017.

The stats aren’t surprising when looking at the number of U.S. households that own a connected TV. At the end of 2017, 210 million devices were installed in consumer homes actively delivering internet connectivity to the TV screen, and by the end of 2021 there are forecast to be 275 million, according to The NPD Group.

For digital brands like Conde Nast-owned Bon Appetit, which launched its own streaming app on Thursday, this growth in CTV use offers an opportunity to create its own viewing destination where it has greater control of content and advertising.

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“In some respects, launching OTT apps is a defensive strategy. Print readership is falling and digital readership isn’t keeping up. At the same time, how-to and niche interest video is booming on sites like YouTube,” co-founder of nScreenMedia Colin Dixon told TheWrap. “Offering video service is an attempt to stop ad revenue leaking away to social and to maintain a subscription relationship with customers.”

Part of the goal for Bon Appetit is to move its social media viewers — and the 1.3 billion views they’ve accumulated across Bon Appetit’s social platforms — to the owned-and-operated TV app where it has a direct relationship with the consumer. CNE has the same plans for its GQ and Wired brands, it announced at last year’s NewFronts.

“Video opens up the opportunity for the company to be able to offer advertisers a better way of engaging with prospective customers,” Dixon added.

Late last year, Refinery29 also launched its own dedicated OTT app, known as Channel 29, with an expanded lineup of original news, entertainment and lifestyle programming perfectly geared for CTVs.

However, not all companies are going the standalone OTT route to have a presence on connected TVs. Building and running a standalone OTT app is a difficult and expensive path to reach an audience, as George Rausch, head of product marketing at Frequency, pointed out in a recent interview.

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“The common thing that people come back saying [after launching a OTT app] is, ‘You know, I launched these apps on very popular app stores — why is my traffic so low and why did I only make 300 bucks?’” he said.  

OTT apps that launch on streaming devices like Apple TV or Amazon’s Fire Stick are competing with hundreds, sometimes thousands, of other apps. Roku alone offers more than 5,000 apps. While the company is constantly trying to make content on its platform easier to find, discoverability is a major challenge given the current glut of competitors.

While CNE can leverage its Bon Appetit magazine to promote the service to help retain existing customers, Dixon noted that “finding new, younger customers will be a challenge. CNE will need to heavily promote through social media and look for distribution partners that can help the potential audience find the service.”

Finding an audience can be just as difficult as keeping one. CleverTap, a mobile app marketing platform with app analytics, estimated last year that OTT apps on average experience a 35 percent uninstall rate three months after being downloaded.

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To increase discoverability, many digital publishers are partnering with emerging and established vMVPD services like Pluto TV and Dish’s OTT service Sling TV. By grouping up with a more popular service, the companies’ content has greater chances of being watched and found.

Jukin, which launched linear channels for its FailArmy and Pet Collective brands across multiple streaming TV platforms, found that being bundled in a lean-back offering boosted its average watch time from 24 minutes to more than 64 minutes per session and overall viewership to 90 million minutes watched per month across both channels.

Launching the channel still required resources and extra personnel, but the venture has so far proved successful, according to Jukin Media founder and CEO Jonathan Skogmo.

“Our overnight success in linear has actually been a couple years in the making. It takes specific skills and experience to do it well, which is why we’ve brought in people like Jill Goldfarb to really take our channels to the next level,” Skogmo said. “We saw strong signals early on — things like 50-plus minute average watch times — and we took that as a proof point to continue investing in the programming and the talent.”

With more eyeballs landing on the biggest screen in the house, the emergence of OTT apps and channels from publishers will be a regular occurence throughout the coming years. Whether the results will mimic Jukin Media’s success will largely depend on if and when the new platforms or channels are discovered. Meanwhile, publishers will continue to expand their offering so that their content is available everywhere a viewer can consume it.

“Simply put, their core audience is changing. Video is becoming a more important part of people’s lives and it carries over into their niche interests,” said Dixon.

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Latest Sign the Cord-Cutting Revolution Is Over: Roku Users Watch 3 Hours of Content Per Day

Read on: TheWrapTheWrap.

Roku revealed two key statistics showing streaming’s increasing ubiquity — and how the device-maker is benefiting from it — when the company reported its fourth quarter earnings on Thursday.

First, the company estimated “nearly 1 out of 5 U.S. TV households” now uses one of its devices to stream television. And secondly, Roku said its customers streamed 7.3 billion hours of content during Q4 — an increase of 70 percent year-over-year.

To put that into perspective: Across its 27.1 million accounts by the end of 2018, the average Roku viewer was streaming almost 3 hours worth of content each day.

Also Read: Roku Pulls Alex Jones’ InfoWars Channel After Just 1 Day

It’s a jarring yet fitting number, considering that Roku is continuing to benefit from the growth of major streaming players like Netflix, Hulu and Amazon. Last month, Netflix estimated its 60 million American customers stream 100 minutes of shows each day on average. It goes without saying that many of those customers are streaming Netflix content via Roku devices.

At the same time, Roku appears poised to see its billions of streaming hours continue to increase, as more streaming services flood the market. Disney and WarnerMedia are set to launch their own services later this year, as well as Apple.

And the sheer volume of content is expanding, with the number of scripted shows on streaming services increasing 37 percent from 2017 to 2018. The Big Three streaming services — Netflix, Amazon and Hulu — took home 12 of 26 Primetime Emmys last September. Quality content, coupled with more providers and more shows, will only drive more time spent using Roku devices.

Also Read: How Roku Is Helping Smaller OTT Services Stand Out in a Saturated Market

Traditional TV stalwarts, meanwhile, are failing to keep up. DirecTV lost more than 400,000 customers during the fourth quarter, AT&T reported last month.

Investors look like they expect this trend — streaming’s rise replacing old school television — to continue. Heading into Thursday afternoon, Roku shares have increased 70 percent to $51.48 per share since the beginning of 2019; after reporting its Q4 financials on Thursday, Roku shares crept up another 4 percent in after-hours trading.

Roku has made its name off its array of devices, which range from $30 to $100, as well as a $200 package that includes wireless speakers. But dig a bit deeper into its Q4 results and it becomes evident Roku is focused on moving beyond its dependency on devices sales.

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Platform revenue, which includes ad sales and licensing, increased nearly 80 percent year-over-year, accounting for $151.4 million in Q4 revenue. Advertisers are progressively turning to Roku as the company looks to not only sell devices but grab eyeballs with its own content.

CEO Anthony Wood, in the company’s letter to shareholders, said Roku is focused on adding more “features and content” to The Roku Channel, aiming to drive more ad dollars.

That’s well and good, but even without its own compelling content, Roku is set to enjoy a banner year, as streaming’s rising tide is clearly lifting its boat.

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Alex Jones’ InfoWars Channel Hits Roku Months After YouTube Ban

Read on: TheWrapTheWrap.

Alex Jones’ InfoWars channel is now available on Roku, several months after the digital shock jock was dropped by virtually every major tech platform.

The InfoWars channel, shortly after going live on Roku on Monday, quickly grabbed the attention of Jones’ detractors, with many threatening to drop Roku altogether if it keeps the notorious conspiracy theorist on its service.

Why are you airing Alex Jones’ conspiracy theories? Most platforms have dropped him and he and his fans harass Sandy Hook parents

— JP (@James_Petitious) January 15, 2019

Hey @Roku @RokuPlayer Why don’t you google Alex Jones & Sandy Hook… go ahead, I’ll wait… see it? Is this what you want to promote on your service? This is not free speech, this is hate speech and propaganda, designed for self aggrandizement and division #Shame

— Spike Fx (@spikeselby) January 15, 2019

I’m glad I found out @Roku is giving Alex Jones a platform for his hate and lies BEFORE I bought a Roku-enabled 4K TV so I can look for a different brand. I’ll also be throwing out the Roku box we have already. #ditchroku

— Neal Babcock (@NealBabcock) January 15, 2019

@Roku @RokuSupport I’ve been a user for many years and have owned several generations of Rokus, but I’m gonna switch to Amazon Fire now that you’ve given Alex Jones a platform to continue attacking the victims of mass gun violence.

— Nate Igor Smith (@drivenbyboredom) January 15, 2019

Also Read: Alex Jones Is Back Live-Streaming on Twitter Immediately After ‘Permanent’ Suspension

Roku, in a statement to TheWrap, said the platform “allows our customers to choose from thousands of entertainment, news and special interest channels, representing a wide range of topics and viewpoints.”

“Customers choose and control which channels they download or watch, and parents can set a pin to prevent channels from being downloaded,” the statement continued. “While the vast majority of all streaming on our platform is mainstream entertainment, voices on all sides of an issue or cause are free to operate a channel.  We do not curate or censor based on viewpoint.”

Roku added it is not “promoting or being paid to distribute” InfoWars content.

Jones is known for pushing several wild and unsupported claims, including a warning last summer that Democrats were plotting to start a second Civil War on the Fourth of July. Perhaps most infamously, Jones called the Sandy Hook school shooting a “hoax” — a claim he is now being sued for by several of the victims’ families.

Attorney Josh Koskoff, who is representing several Sandy Hook families against Jones, told TheWrap Roku adding InfoWars is an “insult to the memory of the 26 children and educators killed at Sandy Hook.”

Jones’ appearance on Roku stands out, considering he was exiled by several Silicon Valley stalwarts last year. Facebook and Google-owned YouTube pulled his InfoWars pages down in August. Spotify removed his podcast at the same time. Twitter followed suit in September, banning Jones for violating its policy against “abusive behavior,” after he badgered CNN reporter Oliver Darcy. The InfoWars app was also kicked off Apple’s App Store that same month.

Also Read: Twitter Deletes 18 Accounts Tied to Alex Jones, InfoWars

In a statement to TheWrap in August, Jones accused China and George Soros of being behind the effort to silence him.

“China pulls the strings of big tech now. Choose a side. Soros is proud of you,” Jones said via text, which also included a Chinese flag emoji.

Despite Jones’ claims he’d thrive following his banishment, InfoWars was hit hard, with traffic plummeting to the site in the weeks after his removal.

Also Read: Sandy Hook Father Accuses Alex Jones of Destroying Evidence in New Motion

Jones’ erasure from every major tech platform was championed by many of his critics, who blasted him for spreading hateful rhetoric and misinformation. Others argued that censoring Jones, no matter how absurd his claims, set a bad precedent. “It’s a really big deal to censor content or kick someone off your platform,” Geoffrey King, professor of media studies at UC Berkeley, told TheWrap in August. “It’s a decision they have the power to make, but it’s not one they should be undertaking lightly, to say the least.”

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Jukin Media Hires Former Comcast Executive Craig Parks as GM of Brands

Read on: TheWrapTheWrap.

Jukin Media has tapped former Comcast executive Craig Parks as general manager of brands.

Parks, who previously served as VP of programming for Comcast’s now-defunct video platform Watchable, will lead programming and strategy for Jukin Media’s slate of brands. That includes Fail Army and The Pet Collective, which combined have more than 15 million subscribers on YouTube alone.

Prior to Comcast, Craig served as SVP of live programming at Participant Media where he was in charge of live events and special projects.

Also Read: Jukin Media Taps Former Discovery Exec Jill Goldfarb as VP of Linear (Exclusive)

“Craig is a true pro and the perfect choice to lead our efforts as our brands continue to grow and evolve from social media powerhouses to full-fledged multimedia entertainment brands,” president and COO of Jukin Media Lee Essner said in a statement.

“These are truly modern-day media brands, each with an ecosystem that spans all the major social platforms, connected TV, mobile apps and even traditional TV,” Parks said in the joint statement. “Not only are they built for consumers who increasingly spend time across platforms for their entertainment, they’re ideal for advertisers to be able to reach consumers wherever they view video content.”

Founded in 2009, Jukin Media acquires user-generated videos and licenses the content for third-party use, in addition to featuring the videos in its own productions. Jukin’s owned-and-operated media brands, which also include People Are Awesome, JukinVideo and Poke My Heart, have a combined 160 million followers and nearly 4 billion video views across Facebook, YouTube, Snapchat and Instagram, according to the company.

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In addition to being distributed across its social channels, its brands have found a home on more than 20 mobile, web and OTT video services, including Roku, Amazon Fire TV, Samsung’s TV Plus, XUMO, Pluto TV, Plex, Tik Tok and iFlix. Its linear channels for The Pet Collective and Fail Army average 90 million minutes watched per month across both channels.

Craig’s hire comes shortly after the hire of Jill Goldfarb, the former vice president of programming for the Discovery Channel, who joined Jukin Media as its first-ever vice president of linear programming in December.

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