Roku is launching a new curated channel that will bring free programming to the forefront for its 15 million users.
The company, which makes and sells set-top boxes and other streaming media devices, on Wednesday will start rolling out The Roku Channel, which will offer free, ad-supported movies and TV shows from a mix of major studios and channel partners.
Roku says that to create the channel it has struck licensing deals with Lionsgate, MGM, Sony Pictures Entertainment and Warner Bros. As a result, the company will stream such films as Ali, The Karate Kid and Legally Blonde for free with advertising. It is also working with companies that already have channels via its platform — including American Classics, Fandor, FilmRise, Nosey, OVGuide, Popcornflix, Vidmark and YuYu — to help identify and spotlight their free programming. Roku says it plans to add more channel partners to the Roku Channel over time.
"We've seen a huge and growing desire for free content on Roku," says CMO Matthew Anderson, acknowledging that platforms like Roku often make it challenging to identify the free programming. "The industry as a whole has been very focused on subscriptions and transactions. There's a real leadership opportunity for us to put a lot of value back in our customers' pockets."
While there will be ad breaks throughout the programming, Roku says that it plans to offer about half the amount of advertising that would air on a traditional hour of linear television. Anderson declined to comment on the specifics of Roku's advertising agreement with its channel partners, but did say that Roku would sell the ad inventory that would stream on the Roku Channel.
Roku currently makes the bulk of its revenue from sales of its devices, but the company, which in 2016 lost nearly $42.8 million, sees advertising as an opportunity to grow its business. During the first six months of 2017, Roku made $82.4 million in revenue from its platform, which consists of a mix of advertising sales and subscription and transaction revenue sharing, representing growth of 91 percent from the same period a year earlier. But the two most popular channels on Roku, Netflix and YouTube, have not contributed to that growth. The Roku Channel, however, will provide the company with another opportunity to sell advertising against premium programming.
The last time Roku launched a company-curated channel was when it had just released 4K video and wanted to spotlight some of the programming it was carrying in the high-resolution format.
Anderson says there aren't plans to create other curated channels at this time but that the 4K channel and Roku Channel "reveal our thinking about how we're trying to serve customers."
Roku, which offers more than 5,000 channels, filed to go public Friday, Sept. 1. The Roku Channel will become available to users throughout the coming weeks.