Roku has signed a multiyear deal with Lionsgate to exclusively offer the studio’s theatrical releases for free on its ad-supported Roku Channel immediately after their showing on Starz, starting with its 2022 release slate. It includes films like John Wick: Chapter 4, The Expendables 4, Borderlands, Are You There God? It’s Me, Margaret, and more, which will be available on the channel in two separate windows. The second window will be nonexclusive, however, so the Roku Channel will be the first place viewers can see the films for free.
“This agreement affirms the great demand for first-run studio movies across a broad array of platforms,” said Jim Packer, the president of worldwide television distribution at Lionsgate. “This partnership with the Roku Channel shows our ability to capitalize on opportunities in today’s complex television landscape with a multifaceted, layered approach that meets everyone’s needs.”
This is the first deal of its kind for the streaming service and could further bolster its Roku Channel, which reached around 80 million people in the last quarter of 2021 alone. In the fourth quarter of last year, Roku’s platform business (which includes everything where it monetizes users, like the Roku Channel, advertising, and fees on subscriptions) earned about $425 million, while the company actually lost $45.9 million on its streaming hardware business. Between the beginning and end of 2021, Roku’s average revenue per user over 12 months grew from $28.76 to $41.03, fueling gross profits that swelled by 74 percent from $808 million in 2020 to $1.4 billion in 2021.
For years, Roku has positioned itself as not just a streaming service but also an advertising and services platform. The platform retains 30 percent of ad inventory on apps outside the Roku Channel and keeps 100 percent of those profits — which has occasionally caused friction with the likes of Google and Amazon. Last year, Roku inked a deal with advertising agency Nielsen, gaining access to the company’s ad-targeting tech in the process. As noted by Roku CEO Anthony Wood in the company’s most recent earnings call earlier this year, Roku views user data as a “key competitive advantage.” Similar to Facebook, Roku isn’t in the business of selling the actual data so other services can extract value from it directly — it has control over the whole process.
The free streaming channel plays a huge part in bolstering Roku’s ad business, justifying partnering with Lionsgate for exclusive windowed access to these movies and offering its own Roku Originals. Wood told investors on the last call “just how powerful the Roku Channel has become as a source of ad inventory for us and how that’s driving just this incredible virtuous cycle around content, advertisers and viewers.” The resulting growth is what’s allowing the company to invest in things like Roku Originals, Wood said.