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Three days before the Super Bowl kicked off, Roku users received an unexpected and unwelcome email from the company, informing them that stand-alone apps from Fox, the broadcaster of the big game, were being removed from its devices.
A deal between the companies was expiring, and new terms had not yet been reached. Corporate volleying followed, with Fox accusing Roku of “fabricating a crisis” and using “its customers as pawns,” and Roku arguing that with the deal ending, they “no longer have the legal right to distribute [Fox] content.” Fox even drafted its on-air talent into the fight. “Tell Roku hands off your device, and to put you ahead of their business interests,” Sean Hannity tweeted Friday.
But late on Friday, Roku released a statement saying it had come to an agreement with Fox to resolve the dispute.
“We are delighted that we reached an agreement with FOX to distribute FOX channels on the Roku platform,” Roku stated in a post on Twitter. “Roku customers can stream the Super Bowl through FOX Now, Fox Sports and NFL in addition to other ways.”
“We are pleased to have reached a successful agreement with Roku,” a Fox spokesperson said in an email. “FOX’s leading suite of apps will continue to be available on the Roku platform.”
It was the first high-profile example of a new type of carriage dispute, but instead of the cable company versus the TV channel, it’s the content company versus the streaming platform.
“The dispute could open a new front in the business dynamics [between] content and platform providers, and we’re not surprised by the attempt to leverage the … Super Bowl broadcast for maximum leverage,” CFRA Research analyst Tuna Amobi told The Hollywood Reporter earlier on Friday.
Unlike the disputes that have annoyed pay-TV customers for years, the new streaming disputes aren’t about carriage fees. Rather, the focus is on revenue sharing, including streaming video advertising and subscripting splitting, with the platform taking a cut of paid subscriptions initiated in their walled garden.
Advertising and subscription sharing is now Roku’s biggest business, with the company’s platform unit accounting for $179.3 million in revenue in the last reported quarter, compared with $81.6 million in hardware revenue.
Both sides have leverage. Fox has arguably the biggest rights in all of video: the Super Bowl, as well as popular programming from Fox News, and shows like The Masked Singer.
But Roku has unmatched scale in streaming video. According to new data from the online video analytics firm Conviva, Roku now accounts for 23 percent of all time spent streaming, including a 43 percent share of connected TV viewing time. Amazon’s Fire TV was second with an 18 percent share.
Rosenblatt Securities analyst Mark Zgutowicz said that the streamer is “acting from a position of strength” in the dispute, with its massive scale and large user base of more than 32 million. Roku users also have other options to watch the game: in apps from YouTube TV, the NFL or Hulu, through an antenna, or on Fox’s website.
Amobi, meanwhile, had said that Fox “may be looking to set a new precedent for similar deals in the future” by playing hardball.
At least in the case of Roku, Fox will be a winner either way. The company owns a 5 percent stake in the streaming giant, and its stock price has more than tripled over the past two years.
Jan. 31, 8:20 pm PST Updated headline and story after Roku’s statement that it had resolved the carriage dispute.
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