Roku says it's serious about turning its Roku Channel into a destination for original shows.
Late last week, the streaming company discussed with the Wall Street Journal a a plan to produce more than 50 original "ad-friendly" TV shows over the next two years. Roku said the shows will include the usual mix of scripted comedies and dramas, as well as non-fiction competition and situational fare, all priced in the "basic-cable" range.
That works out to about $250,000 - $750,000 per unscripted episode, and $500,000 - $5 million per scripted episode--significantly less than what subscription services like Netflix and HBO Max pay for their top-shelf originals, but right around par what ad-supported VOD rivals like Amazon's IMDb TV pay for shows like Judy Justice.
Brian Tannenbaum, head of the Roku Channel’s alternative originals, told WSJ that internal Roku data suggests that Roku can be successful with programming investments well below what SVOD companies like Netflix spend.
Roku, which touts 155 million total users among its 56.4 million active user accounts, said it just started meeting with talent reps and production companies to discuss shows targeted at the adults 18-49 demo.
Roku has already generated plenty of smoke around originals plans this year, announcing the acquisition of failed mobile SVOD service Quibi's series catalog, and even renewing a few of those shows.
Roku has also dabbled in acquisitions. It acquired the action drama Cypher, while also signing an output deal with Saban Films. Last month, it purchased U.S. rights to the new comedy Children Ruin Everything created by Schitts’s Creek writer Kurt Smeaton.
Roku paid $98 million to acquire This Old House and the company that produces it.
And Roku is also releasing a Christmas special based on the cancelled NBC dramedy Zoey's Extraordinary Playlist.
“There’s a very substantial appetite for free streaming,” Rob Holmes, Roku’s VP of programming, told WSJ. Holmes said Roku gets about 3½ hours of viewing per user daily. “But the average TV household watches seven, eight hours of TV. So there’s a lot more TV viewing for us to capture, and free is a great way to capture it.”
Roku generated $582.5 million in "platform revenue" in the third quarter, which is money mainly generated on ad sales on the Roku OS. But on apps like IMDb TV, Roku recoups less than 30% of ad sales generated on its platform.
The share shoots up to 100% when the ad is sold via the Roku Channel. And Roku said that half of its 155 million users currently watch the Roku Channel.
A real investment in original shows comes at a pivotal moment for Roku, which has seen its Nasdaq value once again steadily plummet after reaching lofty heights over the summer.
From supply chain issues which affect device sales and platform proliferation, to an escalating Silicon Valley war with Google, Roku seems to have 99 problems right now.
A fight with Amazon (opens in new tab) could also soon compound matters, with Roku said to be at odds with how ad share is split with IMDb TV.
Driving viewership to Roku Channel and making it a must-have programming destination for consumers would solve a lot of those problems, however. ■
Daniel Frankel is the managing editor of Next TV, an internet publishing vertical focused on the business of video streaming. A Los Angeles-based writer and editor who has covered the media and technology industries for more than two decades, Daniel has worked on staff for publications including E! Online, Electronic Media, Mediaweek, Variety, paidContent and GigaOm. You can start living a healthier life with greater wealth and prosperity by following Daniel on Twitter today!
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