Fox Takes the Front Porch
Why Fox’s acquisition of Roku is a bold move that all traditional media companies should pay attention to.
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Fox Takes the Front Porch
I’m at the StreamTV Show in Denver this week, where the topic on everyone’s lips is Fox’s acquisition of Roku.
There’s been a lot of debate about how this combined company will work in practice — and whether the deal will be allowed to go through. But for those who have asked my opinion, here are four reasons I think the acquisition was a smart move.
1. It makes Fox a player in streaming without having to fight the streaming wars.
Many questioned why Fox didn’t launch a major streaming app to compete with those of other traditional media companies — a battle that bruised the bottom line of most combatants.
From a pure viewership standpoint, Fox plus The Roku Channel and Tubi (the two largest free streaming services) would move Fox into the No. 3 spot on the Nielsen Gauge, behind YouTube and Disney.
But even more important is that Fox now owns the operating system through which 100 million viewers access all of their TV services. Hub’s research clearly shows that smart TV home screens have become a primary way for viewers not only to find new titles, but also to discover new services to subscribe to. With Roku, Fox will own this point of contact — an even more powerful position to occupy.
2. It makes Fox an aggregator instead of one of the things being aggregated.
Research from Hub and others has shown that consumers desperately want someone to make TV simpler. They like streaming bundles that help them save money on individual subscriptions. But what they really want is true aggregation, where billing, account management, and content discovery all happen in one interface. There are countless companies that provide content, but only a few that aggregate it: YouTube, Amazon, Apple, cable MVPDs, and now Fox.
3. It gives Fox new sources of revenue.
One of the reasons the streaming wars are so difficult is that all competitors are pulling the same levers: spending ever more on content in the hope of bringing in enough subscribers and/or ad dollars to turn a profit. With Roku, Fox will have better data and more inventory against which to sell ads.
In addition, Fox will earn revenue from subscriptions sold through Roku. Currently, that means subscriptions to other streaming services — but consumers are highly motivated to simplify subscriptions of all kinds. Roku could easily expand to bundle subscriptions to music, gaming, podcasts, The New York Times, DoorDash, and really anything else people buy on a subscription basis. As the subscription economy continues to expand, consumers’ desire to simplify it will grow, and aggregators will profit.
4. It’s a bold move at a time when bold action may be the only option.
There will be plenty of challenges in making this new company work. But that’s not a reason not to do it. On the contrary, what’s the alternative?
The struggles of traditional media can be chalked up as much to indecision as to bad decisions. In particular, many companies froze in the oncoming headlights of streaming when there was still time to get in the car instead of being run over.
Reinvention is hard, and many companies are still struggling with it. But Fox is taking big swings. The acquisition of Roku, the success of Tubi, and its pivot to embrace creator content all suggest that Fox has the will to become a company that can survive — and maybe even thrive — in our reinvented content ecosystem.
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Hub Entertainment Research tracks how technology is changing the way people find, choose, and consume entertainment content: from TV and movies, to gaming, music, podcasts and social video. Working with the largest networks, pay TV operators, streaming providers, and studios, Hub’s studies have covered the most important trends in providers, devices, and technologies since 2013.
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