Fox Corporation’s commitment to spend $22 billion to acquire streaming platform developer Roku further highlights the growing role that television operating systems are playing in the media and entertainment business, according to new research released this week by Parks Associates.
Based on a survey of more than 8,000 American households, Parks’ latest “Tech Ecosystem Dashboard” refresh shows nearly half of all broadband subscribers — 43 percent — affirm Roku is their primary streaming platform of choice. Among smart TV owners, nearly one in five say their primary TV is powered by Roku’s operating system, Parks said.
Those figures help explain the strategic value Roku brings to Fox: The proposed combination would pair Fox’s sports, news and entertainment assets, along with Tubi, with Roku’s operating system, The Roku Channel, Frndly TV, Howdy, advertising capabilities and first-party audience data.
“Roku’s strength is its reach across the connected TV experience,” Michael Goodman, the Research Director at Parks Associates, said in a statement on Wednesday. “Its position across smart TVs and streaming media players gives the platform influence that extends beyond any single hardware brand.”
The deal would also strengthen Fox’s position in free ad-supported streaming television: Parks Associates ranked Tubi as the leading U.S. FAST service in its latest list, followed by The Roku Channel, Pluto TV, Samsung TV Plus and Xumo Play. LG Channels, Vix, Local Now, WatchFree Plus and Sling Freestream rounded out the top 10.
Bringing Tubi and The Roku Channel under the same corporate owner would give Fox control of two of the largest ad-supported streaming properties, while Roku’s platform could provide additional opportunities to connect content discovery, audience data and advertising.
But that type of synergy has also invited scrutiny: On Wednesday, Fox said it received a request from the U.S. Department of Justice for more information about its proposed acquisition of Roku. The notification was made in a filing to the U.S. Securities and Exchange Commission.
The information sought is likely related to how Fox intends to operate its free streaming service Tubi in tandem with The Roku Channel, given the prominence of both platforms in American homes. Tubi is one of the most-used, no-cost ad-supported streaming services in America — not just by Parks data, but also in Nielsen’s monthly “The Gauge” reports. The Roku Channel also ranks highly on both reports; its unparalleled reach is largely based on Roku’s decision to incorporate it by default in every streaming device and smart TV powered by its operating system, whether a user wants it or not.
Goodman added an additional concern to a Fox-Roku tie-up: Fox could have tremendous influence over how Roku streamers look for and discover content in the future.
“Competition in video is now about who owns the relationship with the viewer,” Goodman said. “Content remains critical, especially live sports and news, but the platform determines how consumers discover that content and how providers engage and monetize audiences.”
To some degree, that is already happening. Earlier this summer, before the merger announcement was made, Fox and Roku unveiled a deeply-discounted bundle that paired a one-month subscription to Fox One with a premium Roku Streaming Stick for $20 — significantly less than the individual cost of both products on their own. The deal was timed to coincide with the start of the FIFA World Cup soccer tournament, which aired on Fox-owned TV channels.
After the merger announcement, Roku began refreshing some of its menus to promote more content from Fox-owned products. On The Roku Channel, a subscription to Fox One received a prominent promotional slot alongside other third-party subscriptions like Paramount Plus, even after the World Cup tournament ended. Roku’s home screen advertising and other menus has also pushed users to download Fox One, Fox News and Fox Local, based on a review of devices used by The Desk.
Parks Associates intends to take a deeper dive into its streaming industry data at the “Future of Video: Business of Streaming” conference scheduled for mid-November in Marina del Rey, California. The Desk is an editorial partner of the event.
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