Roku Gets Into the Content Creation Game

Rokus Wants to Make Content for Its 155 Million Customers

Roku (ROKU) wants to be more than just a vehicle for showcasing other companies’ content. The streaming device maker is gearing up to create over 50 original shows during the next two years. The idea is to morph Roku into a leading destination for consumers to access free content.

As it stands, about half of the 155 million people in the US with a Roku device visit the Roku channel. On this channel, Roku serves up free content with ads through more than 200 licensing deals with outside content providers. Roku wants to capitalize on its access to viewers by making new shows in-house.

Roku Takes on Big Competitors

Roku is not disclosing exactly how much it is spending on its content initiative. The company said that it expects costs to be in-line with production costs for basic cable shows. On average, those budgets are a lot lower than what companies like Netflix (NFLX) and WarnerMedia (T) pour into their hit shows.

The streaming device maker has started receiving show proposals from production companies. Roku is mainly looking for shows to reach audiences ages 18 to 49, and is looking for both scripted and unscripted programs. The latter could include reality shows, competitions, and lifestyle programming.

The Importance of Ad Sales

Roku started out making and selling devices which allow viewers to stream a wide variety of content from one platform. However, the company’s ad sales business is taking off. Roku raked in about $1.3 billion from ad sales in 2020, including revenue from its distribution agreements. Companies pay Roku for placement on the platform and on the Roku channel.

During the height of the pandemic, the amount of time people spent streaming content on Roku climbed 65%. That rapid growth has slowed somewhat, but Roku still has a captive audience. The company is hoping that their audience has an appetite for free content.

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