Photo of Roku devices over a blue background.

How To Make Money Owning A Roku Channel

The Roku platform is a huge opportunity for video publishers and media companies in 2020. Nearly ⅓ of all US smart TV watchers are on Roku, and that number is still rising. But the question for many businesses remains: What is the best way to create a Roku channel? And how do you make money with a Roku channel?

So let’s start with the basics: How do you make money with a Roku channel? There are two main ways to do it:

Ad-Based (AVOD) vs. Subscription-Based (SVOD).

Ad-based Video on Demand (AVOD) are channels that sell ads to make money. This is the most traditional TV route, with everything from cable TV to YouTube having ads before, in-between or after content. These ads can take many shapes, from typical pre or mid-roll ads to sponsored content, banner images, infomercials, direct sponsorships, etc.

Subscription Video on Demand (SVOD) are channels that charge users a monthly or annual fee to access content. Think Netflix, Hulu, and other major “cord-cutting” services. This is a more recent development in video but has already become wildly popular, especially among businesses with high-quality content and loyal audiences.

If you’re interested in learning more about building AVOD or SVOD streaming apps, get in touch with us.

3 Ways to Make Money with Ads on Roku.

Photo of Roku devices over a blue background.

Generally speaking, selling ads is the simplest method. There are plenty of monetization tools that can help channels quickly run ads and make money. But most of these tools come with a price.

#1: Roku Direct Publisher

Roku’s Direct Publisher helps US brands launch a channel for free and start running ads. This allows Roku to sell ads on your behalf, no development or work needed from you. The tradeoff is that Roku takes 40% of revenue earned. Plus, you don’t have control over what ads get chosen or when they run.

#2: Video Advertising Networks (VANs)

Video Advertising Networks (or VANs) are a similar third-party option. With a VAN, making money on Roku is as simple as signing up and dropping their code to your channel. However, you may run into some of the same drawbacks: You can’t control what ads run or when. Most services only fill 40-60% of available ad breaks (leaving money on the table). Plus, they take a cut of your revenue.

#3: Custom Ad Servers

Lastly, you could develop a custom ad server and control of your own ads. Here, you get to decide when and where to serve ads. You can also reach out to advertisers directly and set your own prices. The drawbacks here are obviously that this is much more work for you, both on the development and business side.

Pros and Cons of Going Subscription-Based.

Many video businesses, magazines, newspapers and blogs are instituting paywalls over ads. This is for a few reasons: First, ads can interrupt and annoy users. Also, ads require thousands of impressions to even begin driving any revenue. Subscriptions allow you to make exponentially more money per viewer, so you can build a strong business model with a smaller, more concentrated audience.

But to succeed as a subscription-based business, you’ll first need to build a loyal fanbase. With so much free content in the world, viewers are hesitant to pay for content they don’t need. In our experience, finding a niche is a more effective method for driving loyalty than trying to please everyone with every type of content (even Netflix is shifting towards more original content while dropping franchises like Friends and The Office). 

There are also businesses like Hulu which institute both ad-based and subscription-based revenue models. This can be a “best of both worlds” solution for your business, if you’re able to balance it out properly!

Other Ways to Monetize? Get Creative.

Just like in any industry, sometimes the best way to make money on Roku is to think outside the box.

For many nonprofit and  on Roku, donations are an important part of how they stay afloat. Or if you’re producing original content, in-video sponsorships or product placement can be another excellent source of revenue. 

And while Roku may not have a great solution for it just yet, e-commerce is another big route you could take. If you have a dedicated fanbase, selling apparel and swag could be just as effective as monetizing the content itself. The only trouble here is that you’ll likely have to encourage users to visit your website or shop outside of Roku.

Looking at the big picture.

At the end of the day, the most important step in monetizing a business on Roku is thinking about how your audience operates.

If you have a fleeting, but large audience that loves binging through content, AVOD (ads) can be an excellent way to profit off of the momentum. On the other hand, if you have a smaller but more dedicated fanbase, setting up a subscription or SVOD style channel could be a huge win. 

If neither of these two fit your needs, it’s time to consult an expert. If you’re serious about making money on Roku, or just want some guidance on the video business at large, get in contact with our team.

YouTube Select 20May2020

Connected TV the fastest growing YouTube platform

Three trends are redefining video, empowering viewers to watch content as never before, advertisers to reach customers as never before and creators and artists to find audiences as never before with connected TV on the rise and about to be exploited by YouTube says the firm’s chief product officer Neil Mohan.
YouTube Select 20May2020
In a blog post exploring the transformation of the viewer video experience as YouTube builds for what it calls a dynamic future, Mohan said that the video landscape today is rapidly changing in ways that are redefining how we watch, what we watch, and why we watch—developments that impact not just viewers, but also advertisers, creators, and artists. And while some of these trends have been years in the making, he noted that the pandemic dramatically has accelerated their evolution.

Mohan said that viewers were leaving behind traditional primetime, that YouTube was finding that the new primetime was personal. “People want the freedom to stream anything whenever they want, whether it’s a favourite movie, a hard-to-find music performance, a premiere sports event, or even a tough workout,” he remarked.

Another key trend highlighted was that viewers were also increasingly streaming content on their connected TV (CTV) screens as they spend more time at home. And though mobile still made up the largest percentage of how content is consumed on the YouTube platform, the fastest growing viewing experience was on the TV screen. Mohan revealed that in December 2020, over 120 million people in the US streamed YouTube or YouTube TV on their TV screens. “And there’s another interesting viewing behaviour emerging,” he added. “A new generation of viewers chooses to watch YouTube primarily on the TV screen: Also in December, over a quarter of logged-in YouTube CTV viewers in the US watched content almost exclusively on the TV screen.”

Concluding his post, Mohan said that as the three trends lay out, it was an exciting time for digital video. “Video empowers viewers to watch content as never before; advertisers to reach customers as never before; and creators and artists to find an audience as never before. CTV, e-commerce, and short-form video will continue to play out in the years ahead, and I’m looking forward to seeing what new trends redefine the place of video in our lives,” he said.

Parks pay TV 29Jan2021

Two-fifths of US pay-TV homes likely to switch to vMVPD

Even though the recent absence of live sports and  performances has created challenges for virtual multichannel video programming distributors (vMVPDs), they look set to benefit from a transition away from traditional pay-TV in the US says research from Parks Associates.

Parks pay TV 29Jan2021

Prior to the pandemic’s effects on streaming video consumption, vMVPD subscriber growth was waning, with some vMVPDs posting continued losses. And even though Covid-19 has driven growth and in some cases recovery in the category, recent increases in vMVPD pricing make it uncertain how consumers will respond long term.

Yet the Growth and Challenges for vMVPDs report found that successful services like Hulu + Live TV and YouTube TV have been able to push the advantages in pricing, content, and platform flexibility to drive growth. The result is that 43% of US broadband households with traditional pay-TV are likely to switch to a in the next 12 months.

“Subscriber losses in traditional pay-TV continue, while the vMVPD category continues to grow, thanks to consumer price sensitivity and preferences for platform flexibility,” said Paul Erickson, senior analyst, Parks Associates commenting on the report. “Traditional pay-TV operators have online delivery in their roadmaps, if not already deployed. We expect vMVPDs will continue to grow dramatically and will gradually become the dominant offering in the pay-TV landscape.”

The Growth and Challenges for vMVPDs report also revealed 17% of vMVPD subscribers switched from traditional pay TV within the last twelve months. It added that the factors driving pay-TV defections include pricing and perceived value, while consumers positively respond to the flexibility of vMVPDs to deliver unique and targeted content packages on a variety of connected entertainment platforms.

“vMVPDs have substantial opportunity if they can avoid the pitfalls that typically drive pay-TV customer dissatisfaction, such as rising prices and inflexible content and platform options,” Erickson added. “With content prices rising and competition increasing, vMVPDs should remain conscious of consumer price sensitivity while keeping a strict adherence to a consumer-centric experience.”

JD PowerSVOD 29Jan2021

Streaming steaming but new services cut into Netflix’s market share

A JD Power insights posting has revealed the new normal in the online video arena with the plethora of new studio-based services being rapidly taken up by US viewers’ viewing time and average number of services used are both increasing.
JD PowerSVOD 29Jan2021
The new research compared the state of streaming at the end of 2020 with the situation in April 2020 just after stay at home orders were announced in the US. In an effort to get a sense to how the streaming landscape had changed in that time, JD Power conducted a follow-up survey of 1,745 US adults, delving into their viewing preferences, usability challenges and future plans for using subscription-based services. One of the key things it noted was that the six-month period saw the launch of major direct-to-consumer services such as NBCUniversal’s Peacock and Time Warner’s HBO Max.

The research found that viewers increased their streaming subscriptions to an average of four streaming providers in December 2020, up from three streaming in April 2020 and with the average monthly household spend on all streaming services commensurately rising to $47 from $38. And while Netflix maintained lion’s share of the market, five of the next six-largest streaming providers all made market share gains since April 2020 with Disney+’s The Mandalorian was the most-watched show on streaming sites in December 2020.

Drilling down, the study found that half of respondents said that their household now subscribes to four or more streaming services. In April, that figure was 39%. In addition, 13% said they use as many as seven or more services. The average number of streaming subscriptions is four, up from three in April. That has caused the average monthly expenditure of streaming services to make its $9 from April to December 2020.

JD Power’s research also said that in the eyes of respondents, Netflix was still the gold standard of streaming services with more than four-fifths of respondents subscribing to the SVOD leader. Yet there was plenty of optimism for Netflix’s competitors as the service’s share declined four percentage points in the months since April (85%), while five of its next six-closest competitors all picked up ground.

Amazon Prime Video ranked second at 65% (down from 66% in April), followed by Hulu at 56% (up from 48%), Disney+ at 47% (up from 37%), YouTube TV at 20% (up from 17%), HBO/HBO Max at 22% (up from 13%) and Apple TV at 14% (up from 10%). Peacock, at 18%, had no presence in April.

Samsung Etsy 2 Nov 2020

Connected devices set for merry Christmas

Anticipating the impact of the Covid-19 pandemic to be receding, Strategy Analytics is predicting record holiday sales of connected TV devices in the fourth quarter of 2020.
Samsung Etsy 2 Nov 2020
In its Global Connected TV Device Vendor Market Share study, the analyst calculates that global sales of connected TV devices will reach more than 111 million units, representing growth of 32% compared with the previous quarter and 6% compared with the same quarter a year ago.

Games consoles are set to be the fastest growing device, with Q4 sales expected to grow by 150% compared with Q3. By contrast, growth in media streamers will be 42% and smart TVs 9%. The strong Q4 will said the analyst bring full-year 2020 sales to 315.6 million units, an increase of 6% on the 2019 level and the highest ever total.

The report also predicts that Amazon will be the leading vendor in Q4, with sales of 12.8 million connected TV devices. Samsung and Sony are each expected to sell around 12 million devices, while LG and Nintendo will sell close to 7 million. By the end of 2020 the report predicts that there will be nearly 1.3 billion connected TV devices in use worldwide, supporting the transition from traditional TV towards streaming video services.

“Demand for smart TVs, streamers and consoles has held up remarkably well after a year of such enormous challenges,” said Strategy Analytics Connected Home Devices Analyst, Chirag Upadhyay. “Supply chain issues were overcome relatively quickly, and consumers have demonstrated that they are keen to stay up-to-date with the latest technologies in order to get the best possible video and TV streaming experience.”

“For many people, streaming video and TV are increasingly the default options when they switch on the big screen,” added David Watkins, director, Connected Home Devices at Strategy Analytics. “Smart TVs are fast becoming the first-choice gateway to the fast expanding world of video-on-demand and internet TV services, and streamers and consoles are a great choice for those who want to upgrade an existing TV.”

STratAnalytics Average increase in Global Streaming Video 16Dec2020

Video streaming subscription growth sets new record in 2020

The continued strength of the video streaming market has been confirmed by a study from Strategy Analytics which has found that demand over the year has received a double boost from Disney+ as well as the Covid-19 pandemic.
STratAnalytics Average increase in Global Streaming Video 16Dec2020
Based on analysis of 21 leading global SVOD services, the Q3 2020 Global VOD Service Competitor Review found that the annual increase in global subscription video-on-demand (SVOD) customers in Q3 2020 reached 217.6 million, the highest ever, beating the previous record of 211.7 million in Q4 2018. The annual increase grew for the third quarter in a row, after declining for the previous four quarters from Q1 2019 to Q4 2019. The trend reflects the impact of the Covid-19 pandemic on video consumption as well as the popularity of the Disney+ service.

The report also found that subscriptions reached 769.8 million in Q3 2020, compared to 552.1 million a year earlier. The annual increase of 217.6 million represented a growth rate of 28.3% and suggests that the SVOD market is still a long way from reaching maturity. The report added that major services such as Disney+ continue to expand geographically and the potential for SVOD in many countries is still largely untapped.

“Until early 2020 it looked like the SVOD growth curve was heading towards a plateau, but the annual growth rate has actually been accelerating during the past twelve months,” commented Michael Goodman, director, TV and Media Strategies commenting on the Q3 2020 Global VOD Service Competitor Review.he Q3 2020 Global VOD Service Competitor Review. “Netflix of course remains the clear leader, but its share of subscriptions has been falling steadily as new entrants arrive. Disney’s rapid growth has helped it reach the #2 position in subscriptions, and with its various D2C services it has already reached an annual revenue run rate of $5.8 billion.”

“This evidence confirms that the transformation of TV is well under way,” added David Mercer, the company’s VP and principal analyst. “SVOD services are playing a key role in changing the way people watch TV, and we expect hundreds of millions of homes worldwide to move away from traditional broadcast and pay-TV over the coming decade.”

Capgemini SVOD 21Nov2021

SVOD services to overtake pay-TV by the end of the year

With a boom throughout the Covid-19 pandemic, the online streaming industry has seen a huge boom throughout Covid-19 with a great rise in daily sign-ups and now research from Capgemini projects that subscription video-on-demand (SVOD) will overtake pay-TV in more than 30 countries by the end of the year.
Capgemini SVOD 21Nov2021
The report, OTT Streaming Wars: Raise or Fold, explored the state of the media industry, aiming to better understand the role of data in differentiation and gaining a competitive edge across different areas like content sourcing, customer acquisition, customer loyalty, cost and lifetime value.

Capgemini interviewed close to 50 senior media industry executives and experts in various companies from APAC to the Americas between July and September 2020 and geographically span the globe. Its discussions included broadcasters, telcos, right holders, pure players and key vendors.

One of the fundamental findings media and entertainment companies of all shapes and sizes, regional and local, were all looking for ways to establish their own OTT (over-the-top) streaming services and searching for answers about how to survive and thrive in a fiercely aggressive market. And the dynamic towards OTT went beyond just series and film. Indeed, OTT was found to have entered all forms of content, including sports, gaming, podcasts and theatre.

Another key element of the survey was to find out how data was being used for business insights. Capgemini said that the survey showed that if content is king, data is now the ace. It found that nearly 70% of those interviewed declared data to be business critical for survival. The survey noted that data could increase competitiveness on all core business areas, including content experience personalisation and enrichment by 70%; audience and data monetisation by 55%; content production and acquisition by 40%.

Two-thirds of companies reach only a basic level of data-maturity; challenges include: lack of clear vision and culture around data and insights; difficulty dealing with privacy and regulation; shortage of adequate people, skills and resources to transform at scale.

Capgemini also saw a market based on consolidation and new opportunities for aggregators. It said it was seeing a rise of aggregating services that are trying were reduce complexities for the consumer, by combining content from various right holders, or different streaming services, via one interface. These aggregators are mainly telecommunication providers or major tech companies such as Amazon Channel, Jio T +, and a bundle solution partnership by Viacom CBS and Apple.

What such services had in common said Capgemini was that their value proposition is focused on ease of use, guidance and support for users who are lost or annoyed by an overload of OTT platforms. The company said that to be successful the aggregators had to excel at user experience and unlock key aspects of the value proposition including ease of use and guidance. The more fragmented the market, the more complicated clear guidance gets, and thus, the need for more aggregators.

In conclusion, the OTT Streaming Wars: Raise or Fold report said that the age of data creates challenges for the Media & Entertainment industry as it needs to learn and balance creativity, tech and data from production to distribution or monetisation. At the same time, Capgemini stressed that it creates unique opportunities to differentiate the role of medias in contrast to the global algorithm “dictate” of social media. Media & Entertainment companies must become more intelligent, trustable and relevant by leveraging both data and people to safeguard media creativity, independence and diversity.

Hub default VOD 27Aug2020

Online TV platforms first stop for viewing for half of US consumers

A new study from Hub Entertainment Research has found that streaming video over online platforms is “comfortably” surpassing traditional pay-TV with Netflix maintaining its steady climb as consumers’ TV “default” while live TV has continued its steep drop over the past four years.
Hub default VOD 27Aug2020
The Decoding the Default study was conducted in August 2020 among 1,600 US consumers with broadband, aged 16-74 who watched at least an hour of TV per week. The 2020 report marked the fifth anniversary of the research programme which tracks the TV source that consumers consider their TV home base, that is what they turn on first when they’re ready to watch.

Hub noted that viewers’ choice of default was being driven primarily by two factors: content and ease of show discovery. The top reason for making a source a default was because it offered access to one’s favourite shows. But a more general content consideration was a top driver as well, with a wide variety of shows and movies to choose from. Interface simplicity was also a top driver of default: in particular, the service makes it easy to find something to watch.

The 2020 study identified viewers’ “home base” and the considerations that drive their choice of default. The fundamental finding was that online TV sources — including streaming on-demand services like Netflix, free services like Pluto TV and virtual MVPDs like YouTube TV — are now the TV go-to for half of all TV consumers. The 50% who said an online service was the first source they turn on, was up three percentage points on the previous year. Just over two-fifths (42%) said that their first choice was viewing from the traditional TV set-top box — that is live viewing, DVR or video-on-demand — which was down from 47%. The remaining viewers defaulted to viewing over-the-air, from an antenna.

For those who defaulted to an online source, nearly half, 23% of the 50%, said that online source is Netflix. The subscription video-on-demand (SVOD) leader was by itself now nearly as likely to be consumers’ TV home base as all live TV channels accessed through pay-TV combined. Pointing out the rate of growth and the underlying trends, Hub noted that back in 2016, live TV from a pay-TV service was three times as likely as Netflix to be viewers’ TV default. Netflix alone current trails live viewing by only 7 percentage points.

Looking at age demographics in order to ascertain where exactly this growth was coming from, the study found that fewer than a fifth of consumers defaulted to live TV, down 7 points from last year. But more ominously, said Hub, even among live TV’s strongest adherents—those age 55 or older—the proportion defaulting to live has dropped significantly since just last year. Only 14% of 18-34 year olds turned to live TV before any other source, compared with 21% in 2019. There was also a 7-point drop among 55+ year olds for whom fewer than half now say live TV is their viewing home base.

And to emphasise the importance of the base level option, the study found that when consumers decided it was time to cut back on TV services, they were much more likely to remain loyal to their TV service default. When asked to indicate us which one TV service they’d keep if they had to drop all others, consumers said that among users of each, their pay-TV service and Netflix were the two most likely to make the cut.

However, among users of each service who also treat it as their default, the proportions saying they’d hang on to the service to the bitter end are much higher. For subscribers to the leading four SVOD services — Netflix, Amazon, Hulu, and Disney — loyalty to the service is 2 to 4 times higher among those who default to the service vs. users of each service overall.

“We’ve seen a significant boost in streaming TV service subscriptions since the start of the pandemic in March of this year,” said Peter Fondulas, principal at Hub and co-author of the Decoding the Default study. “But perhaps more significant than the simple increase in online subscriptions is the profound shift in consumers’ viewing behaviors generally. Instead of reaching first for the cable remote when it comes time to watch TV, more and more consumers are defining TV viewing, first and foremost, as viewing on streaming services. Whether that shift persists once the pandemic crisis has passed is, of course, the billion-dollar question.”