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

5 Questions: “Nine out of 10 people are looking for free content on our platform,” Roku programming VP Rob Holmes says

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.)

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.

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.

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.

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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