Key Points
- Fox Corporation executives said The Roku Channel and Tubi will remain separate apps for the foreseeable future, despite expected synergies following Fox’s acquisition of Roku.
- The Roku Channel benefits from deep integration across Roku devices and prioritizes free linear channels, while Tubi’s strength lies in its large on-demand content library that drives the majority of its viewing.
- Key strategic questions remain unresolved, including how Fox will manage content licensing across both apps and support Roku’s hardware and platform business over the long term.
Roku’s free streaming service The Roku Channel is expected to remain an independent app from Fox-owned Tubi for at least a little while after Fox’s acquisition of the streaming hardware maker is complete.
On a conference call with investors Monday, Fox CEO Lachlan Murdoch said the two free streaming apps will see obvious synergies when Fox Corporation to acquire Roku in blockbuster $22 billion deal, but that doesn’t mean the apps will combine into a single streaming service anytime soon.
“It’s too early to say, but our expectation is fully that you keep the services separate,” Murdoch said, shortly after the companies announced the deal. “They serve consumers and our viewers in different ways.”
Roku CEO Anthony Wood, who is slated to receive a board position at Fox once the deal closes, said the free streaming businesses of both companies will enjoy obvious synergies after combining, with Fox leaning on Roku’s scale and Roku leveraging Fox’s decades-old advertising business that is being refreshed for the connected TV future.
“The combination of the Roku Channel, our ad inventory that we have distributed through the platform and Tubi creates an extremely large and scaled ad platform, and then a combination of the data and the ad tech,” Wood said on Monday’s call. “That’s obviously going to be incredibly helpful for our business.”
Roku and Tubi built complementary and similar products that are successful for different reasons. The Roku Channel is baked into every Roku streaming stick, set-top box and smart TV by default, with no separate app to download, install or pay for.
Roku heavily prioritizes its hundreds of free streaming channels, though the company has made a concerted effort to acquire more content for the on-demand portion of its app. Fox-owned streams like Fox Weather, LiveNow from Fox and Fox Sports FAST are among the free streaming channels offered through The Roku Channel, and Fox-owned local TV stations have free news feeds there as well.
By baking The Roku Channel deep into Roku’s ecosystem, the company has placed the app in front of more than 100 million streamers who prefer to use Roku’s operating system above all else. And “free” is a hard value proposition for most streamers to turn down: They’ve helped make The Roku Channel the second most-used free streaming app in Roku’s ecosystem, behind on YouTube.
Fox, on the other hand, has spent a considerable amount of effort acquiring content for Tubi since buying the app for $440 million six years ago. More than 90 percent of content streamed through Tubi is from the platform’s on-demand content library, where thousands of movies and TV shows are available to stream without a subscription.
While Tubi does have a handful of free streaming channels from its own Fox portfolio and other programmers, the on-demand catalog is what users are first exposed to when they launch the app across most supported platforms, including Roku. Several years ago, executives at Fox said the value proposition of Tubi’s on-demand content helped the service generate more advertising revenue than the company’s flagship broadcast network. Today, Fox reports its broadcast network earnings commingled with that of Tubi.
Less clear is how Fox intends to nurture two separate streaming apps over the long term, including whether it will negotiate license and distribution agreements for content and free linear channels on a per-app or bundled basis.
Also unknown is how Fox, a media company, will support Roku’s ongoing hardware and platform development, or what it will do with Roku’s two other streaming services, Frndly TV and Howdy, should the deal come together.
More Stories
- Fox Corporation to acquire Roku in blockbuster $22 billion deal
- Roku launches $25 bundle with Streaming Stick Plus, Fox One
- Roku leans into creator trend with new “Creators” hub
- Parks: Roku, Samsung are dominate connected TV platforms in U.S. homes
- Parks Associates: Tubi is most-used free streaming service in U.S. homes
