A Few of Our Roku Channels There are several ways to make money with a Roku channel. This article discusses several popular options we use to help our customers monetize their channels. A popular way to monetize Roku channels is to charge a one time purchase price. Some channel owners charge as little as 99 cents to purchase their channels. While this will get you channel channeels, you may not make enough money to pay for your costs such as the streaming data that you will need to purchase from your video hosting provider. In short, if you are going to offer a one time low cost purchase price, you need to ensure that you rpku able to make money at this low price point. You also need to remember, that Roku takes about 20 percent of the money you receive from any purchase. You need to factor this cost of doing business into your channel plans. Even if you offer makd channel at a higher price point, remember that your video streaming provider will charge you progressively more as you add streaming users. We only recommend one time purchase prices for channel owners rokk have very low data streaming costs. Roku allows you to charge monthly fees, quarterly fees and yearly fees for your channel.
There are two parts of Roku’s business: streaming media players and its content platform.
The company’s brand is synonymous with streaming set-top boxes, but has also expanded into other hardware products like its streaming HDMI stick as well as partnering with smart TV manufacturers that integrate Roku TV. Roku operates a platform for TV content that is available to content creators, offering a variety of monetization options. With a glimpse at Roku’s financials, investors can now get a better sense of the business and how Roku makes its money. The two main parts of the business are player sales and platform revenue. Roku relies primarily on third-party distribution channels like electronics retailers to sell its players, in addition to selling players directly on its site. This part of the business is fairly straightforward. As far as profitability goes, Roku is consciously sacrificing profitability in an effort to sell more players and grow the number of active accounts it has. Player gross margin fell to just 6.
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The platform side of the business is where it gets both more interesting and more complex. Perhaps more importantly for investors, Roku’s overall financial success will largely hinge on whether or not it can execute on the platform front. Platform revenue comes from fees received from advertisers and content creators, as well as licensing fees that Roku earns when service operators or TV manufacturers integrate its service. Channels have three options to monetize their content: selling ads, selling subscriptions, or selling content on a transactional basis i. These are the main sources of platform revenue. The company often doesn’t do this for channels with small audiences. Roku only recognizes its net share in its financial statements.
The Roku Channel past and present
Fulfilling a promise made in early January, Roku has rolled out the first premium subscription options for The Roku Channel. Roku offers the most popular streaming platform on the market. Its Roku devices offer users of subscription streaming services an easy way to access all of their content through one interface. Until relatively recently, Roku was content to organize content rather than provide it. Then came The Roku Channel, a free app for Roku’s own platform that gave streamers access to free on-demand content that Roku licensed from media companies or other free ad-supported streaming apps. The Roku Channel was available only to Roku users. In addition to that free content which isn’t going anywhere, Roku says , The Roku Channel will now offer content from premium subscriptions like Showtime — provided, of course, that viewers pay for those premium subscription services. Roku will allow users to sign up for such premium subscriptions right there in the Roku app, and it will take a cut of the subscription fees.
There are two parts of Roku’s business: streaming media players and its content platform.
For video companies and entrepreneurs alike, Roku represents a huge business opportunity. There are enough tools in the OTT space to make your head spin. What are the major ways you can make money with Roku? There are two broad categories:. This is the most traditional TV route, with everything from cable TV to YouTube having ads before, in-between or after content. These ads can take many shapes, from typical pre or mid-roll ads to sponsored content, banner images, infomercials, direct sponsorships, etc. This is a more recent development in video but has already become wildly popular, especially among businesses with high-quality content and loyal audiences. Generally speaking, selling ads is a more accessible route. There are plenty of instant-monetization tools that can help channels of any size start running ads and making money. But most of these tools come with a price.
Another similarity is the ease of uploading videos. Transactions include a content purchase or rental movie, sports event, football match or a game purchase angry birds, chess backgammon etc. Get your answers by asking now. Platform revenue comes from fees received from advertisers and content creators, as well as licensing fees that Roku earns when service operators or TV manufacturers integrate its service. TVOD consists of channels on the Roku Platform that charge a fee when you purchase a movie or other content and you pay for that content on the fly. Evan Niu, CFA. Since content providers are allowed to source their own advertisers , this model is more attractive for large content owners than Youtube because Youtube doesn’t offer this option. Trending News. TV manufacturers are in the business of selling TV’s and are not in the software business.
What Is Roku (And Why Should You Create A Channel)?
Developers can monetize their Roku channel in two ways: 1. So although Roku still makes money on selling the Roku boxes, the company is shifting towards licensing the OS. How do Roku Developers make money from their channels and shows? Platform revenue comes from fees received from advertisers and content creators, as well as licensing fees that Roku earns when service operators or TV manufacturers integrate its service. Mostly these are 15 to 30 second video clips. Currently, about 27 million users enjoy the Roku platform and much of the recent growth is achieved by preinstalling the Roku OS on television sets. So in addition to paid channels or subscriptions as outlined before, there is also a lot of free content. The fact that Roku has thousands of channels and counting is mostly because it’s very easy to upload a video on Roku. Trending News. In my opinion, the strength in this segment lies in the fact that users may want to watch a single sports event or download a game without being tied up to a subscription. Most are not free. Cruise line: Video shows man knew window was open. Roku has thousands of channels and therefore this model can be copy-pasted many times. Player gross margin fell to just 6.
How to Monetize Your Roku Channel
In this article I would like to explore the core of Roku’s business model. Based on what I read in the comments section, it seems some people don’t actually understand Roku’s revenue streams. I would like to explain the various revenue streams and how they actually make money. The company has 2 revenue segments. The first segment is selling Roku boxes that enables you to get the operating system on your TV.
The strategy of the company is to get as many people as possible on the Roku platform and that is the reason the margins are low on these players. Currently, about 27 million users enjoy the Roku platform and much of the recent growth is achieved by preinstalling the Roku OS on television sets.
The advantage for the TV manufacturer is that they don’t have to build their own operating system or source their. TV manufacturers are in the business of selling TV’s and are not in the software business. Building your own TV operating system means updating it constantly, releasing new features. Just like with PC’sHewlett Packard or Lenovo run Windows on their devices and do not invent their own operating. Roku can be seen as the Windows of televisions.
So although Roku still makes money on selling the Roku boxes, the company is shifting towards licensing the OS. The licensing part is much more scalable. Once people are on the platform, Roku has a couple of ways of making money on viewers. TVOD consists of channels on the Roku Platform that charge a fee when you purchase a movie or other content and you pay for that content on the fly. Transactions include a content purchase or rental movie, sports event, football match or a game purchase angry birds, chess backgammon.
It is widely known that the App Store generates billions of revenue for Apple and with Roku having 27 million users it can be worthwile for developers to build apps for Roku’s app store.
In my opinion, the strength in this segment lies in the fact that users may want to watch a single sports event or download a game without being tied up to a subscription.
I would want to be able to watch a golf tournament without subscribing to a sports channel and paying a monthly subscription. TVOD may enable users to access niche offerings like a history documentary or a cooking workshop.
These types of niche offerings are not readily available on the main streaming services we have today. Gaming can be another growth driver as the gaming business is shifting towards cloud-based access to games instead of games being played on consoles or PCs. Roku may benefit from this trend by selling games on their platform or selling gaming subscriptions like Alphabet is trying to do now with Stadia. Roku already offers developers in- app billingwhich enables a viewer to subscribe to a channel at no cost, but has to pay for specific content in that channel.
This feature might be applied to gaming as the trend in gaming is to offer the game for free and then earning on in-game purchases. It will take time, but the opportunity is there to generate substantial revenues. Recently, the company reported that it is now possible to subscribe to channels like Showtime, Starz and Epix from the Roku channel. Ruku then controls the billing and manages the subscriptions. Roku receives a cut from the subscription revenue.
See below:. The world is switching towards streaming. The cord cutting trend is a fact and instead of paying for a cable subscription where you have no real control on which channels are in the package, the new trend is to compile your own set of subscriptions.
Services like Hulu and Netflix are knownbut what if I am more interested in subscribing to a golf channel, cooking channel or history channel? Major content providers across the world are starting their own streaming service for a monthly fee.
For example Discovery channel is now starting a new service where you pay a monthly fee. The world needs a platform where all these subscriptions can be managed, and that is what Roku is trying to do with SVOD. If you believe that not one platform will be capable of covering one’s viewing needs, a platform like Roku with it’s SVOD and TVOD offerings enables people to create a-la-carte entertainment. This primarily consists of:. When you watch a video on Youtube, you’ll notice that a short advertisement clip is played prior to the actual video.
Roku does the same thing. So in addition to paid channels or subscriptions as outlined before, there is also a lot of free content.
The content is free because ads are placed prior to the content or during the content break. Mostly these are 15 to 30 second video clips. So for example if I want to watch a cooking channel, instead of charging me a fee for watching a cooking lesson, I get to view ads. The oven manufacturer pays a fee to display the ad, and that income stream is shared between Roku and the company that provides the cooking show the publisher.
Roku has thousands of channels and therefore this model can be copy-pasted many times. Youtube has proved that people will watch a short add if the content is free. Some publishers won’t have access to advertisers like in the example above, so Roku connects you with the advertiser. Howevera bigger content provider like a TV channel will probably have it’s own access to advertisers, so why share revenue with Roku? Well, Roku has an audience of 27 million users so it is very tempting to access those eyeballs.
To complement larger content owners, Roku offers the inventory split revenue model. For smaller content owners, the revenue share model is preferred.
Here are the differences:. Inventory Split model: In this model it is the responsibility of the channel owner to find advertisers. Sponsored showsanother revenue stream, occures when movies or shows are sponsored by the advertiser: Family movie brought to you by brand X. Management has stated that the AVOD revenue segment is the biggest contributor to turnover.
The similarity is that ads are shown next to the video of the content creator. An advantage Roku may have over Youtube, is that Roku offers the Inventory split model see. Since content providers are allowed to source their own advertisersthis model is more attractive for large content owners than Youtube because Youtube doesn’t offer this option. This may be another reason why the Roku platform is more attractive for content creators.
Another similarity is the ease of uploading videos. The fact that Roku has thousands of channels and counting is mostly because it’s very easy to upload a video on Roku. The channel owner simply links to his content video file on his PC and you have a channel. So this will definitely help attract new channel content and improve the attractiveness of the platform. Another issue with Youtube is that a lot of content violates copy rights. Roku on the other hand is stricter in what content you can upload to your channel.
For example, if I have a channel on Roku, my videos have to link to a video file on a server or my local computer, but I can’t link it to Youtube. So the fact that content is more «clean»on Roku can be a reason advertisers would want to spend more ad dollars on Roku over Youtube.
On 27 million users that is a lot of revenue. What amazes me in particular is the growth in ARPU as shown. So every new account generates more revenue then. This is a very important metric to keep an eye on, since this essentially shows how the AVOD model is catching on. The AVOD model should be scalablesince new channels are being added and thus new ad revenue can be monetized.
The success of the platform will depend on how much diversity of content Roku can achieve. It will be interesting to see in the next earnings announcement if ARPU grows consistent with the trend.
Anything below that is below the trend. Gaming apps could be a growth catalyst in this area. SVOD can benefit from the advent of niche streaming services that come to market. AVOD resembles Youtube in that video ads are placed next to the actual content video’s. Through it’s direct publisher mode, it is very easy to create channels with Roku and this should increase the diversity of content on the platform.
We should be clearly watching this number, but at the moment it does show us that this company has a model that works and will work well into the future. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it other than from Seeking Alpha. I have no business relationship with any company whose stock is mentioned in this article. Advertising video on demand AVOD is the fastest growing revenue segment. Business model The company has 2 revenue segments.
How to Monetize Your Roku Channel
So if you want to start reaching your audience on their TVs, launching a Roku channel should be your top priority. But figuring out how to start a Roku channel can be a bit tricky especially since most resources online are targeted at experienced developers. Simply put, Roku is an OTT solution that allows viewers to stream videos through their television. Roku OS is the software that runs on these devices.
The Roku Channel was all about free content, until it wasn’t. Now Roku is showing us what the future of streaming subscriptions might look like.
It allows you to choose and download a wide range of OTT apps that you can use to stream your favorite content. Roku currently has over 19 million active accounts. This makes it the largest streaming device provider worldwide. Roku takes the lead and wins by a landslide, making Roku OTT apps the only apps that we can confidently claim are a non-negotiable must in the TV-apps space. If you want to succeed in TV streaming, start with Roku. The other OTT apps are important too, but the success of each depends on your target audience demographics and should come secondary to Roku. Launching a Roku channel can help you expand your reach to customers who already own a Roku device. You get to give them a familiar way to interact with your content and offer higher value for money. It also gives you the opportunity to capture a brand new subsection of potential customers; those who are already comfortable streaming content through their TVs and are looking for more channels to download and interact. There are 3 main ways to create a Roku channel. That way you can choose the most effective option for your business. There are 3 important and technical tasks you need to take care of on your own before your channel is ready to go live:. And although we made it look simple here, be aware that it can be tricky as there are a lot of moving parts you need to be keeping tabs on at all times. It may take a few weeks to get everything up and running. If you have a healthy budget dedicated to launching your Roku channel, you can hire an agency or developer to create a custom Roku channel for you.
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