The Roku IPO on Nasdaq, September 28, 2017.
Roku said Monday it would add 23 more shows to its collection of “originals” to build on its ad-supported content strategy.
The shows include more content they bought from the now-retired streaming service, including four that have never aired. Roku said in January that it has acquired the rights to more than 75 shows from Quibi. It debuted 30 of them in May.
New shows include the 10-part documentary series “What Happens in Hollywood” and “Eye Candy,” a competitive series by Josh Groban. The shows will be streamed in the US, Canada and the UK starting August 13th
The company licenses content from other media companies and has purchased shows for The Roku Channel, including “This Old House,” which it acquired earlier this year. It generates revenue by selling ads against programming.
Needham analysts said in a note last week that Roku’s content goal is to maintain an ad-supported video-on-demand business model without negatively impacting gross margins from content creation.
The Roku Channel “continues to broaden its reach through growing niches,” the analysts wrote. “Total hours of streaming have doubled at [The Roku Channel] in the 2Q21, powered by its flywheel, to create new Roku originals, which translates into more viewing hours, which attracts new advertisers, which leads to higher ad rotations, which Roku invests in new original content, etc. ”
Needham said the originals are attracting new advertisers to Roku.
Evercore ISI analysts said they expect Roku to continue to be opportunistic in purchasing content in order to raise more connected TV advertising budgets.
“But we also believe these investments should serve as a powerful ditch for product differentiation that, over time, can lead to superior pricing power for Roku,” they wrote.
Roku reported second-quarter earnings last week that exceeded expectations, but showed that streaming hours in the quarter were down 1 billion hours from the first quarter of 2021.