Can Roku Become The Next Netflix?

It seems that every media company under the sun is hoarding original content these days, and now, Roku is going down the same route.

Earlier this year, Roku (NASDAQ: ROKU) acquired the complete video library of failed short-form start-up Quibi, debuting this content under the name Roku Originals in early May.

As Quibi was a bit of a joke (harsh, but true), analysts didn’t really put much thought into this purchase. Perhaps Roku just wanted to snap up some cheap and easy real estate? But then, yesterday, Roku announced its first-ever exclusivity deal with Saban Films.

What does this mean for Roku? 

This means that Roku will get exclusive broadcast rights to Saban’s 2021 slate of films and will make them available on its ad-supported Roku Channel, at no extra cost to subscribers. 

About a third of Saban’s 2021 slate is in the deal and will stream free exclusively on The Roku Channel about three months after their theatrical premiere. It will begin with ‘Echo Boomers’, starring two-time Academy Award nominee Michael Shannon and Patrick Schwarzenegger, on June 15, followed by many more. 

Such arrangements are common in the world of streaming, with Netflix and Sony Pictures Entertainment signing a similar agreement this month. But for Roku, a brand whose investors have been famously bullish on the ‘rising tides lift all boats’ mantra in regards to increased streaming competition, this is a game-changer. 

By building a library of exclusive and ‘original’ content for its channel, Roku will attract more viewers, which ultimately can help drive higher ad rates long term. Roku’s ad revenue came in at more than $230 million for Q1 this year.

It’s a bold move, and although terms of the deal have not been agreed yet, it’s unlikely to be cheap. However, with 70 million subscribers as of Q1, Roku is no slouch in the streaming game. 

Perhaps not the next Netflix, but exciting nonetheless.

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