Roku buys Frndly TV and launches pay TV service

Streaming platform Roku acquires Frndly TV for $185 million and launches its own pay-TV service for the first time. The decision sets the company apart from competitors that avoid direct contracts with TV channels and don’t create their own TV packages.

Frndly TV offers a low-cost subscription with live TV and a classic cable TV interface. The service will now become part of the Roku platform, giving the company full control of the subscription model and allowing it to grow its virtual TV business.

Frndly TV offers a low-cost subscription service with live TV and a classic cable TV interface.

Roku goes beyond the advertising model

Most streaming platforms make money from either advertising or commissions from paid subscriptions from third-party services. Roku followed this model until recently. But the acquisition of Frndly TV means a shift to a different strategy – total control over subscriptions and revenue.

Frndly TV is a vMVPD (virtual multichannel video distributor), that is, a service that essentially mimics cable TV: with the familiar channel grid, live streaming, and program recording features. For $9 a month, users get access to popular niche channels like Hallmark, A&E, The Weather Channel, and others.

The service is a virtual multichannel video distributor that essentially mimics cable TV, with a familiar grid of channels, live streaming, and program recording.

Most of Roku’s competitors – including Apple, Amazon and Netflix – avoid the vMVPD segment. The only exception is Google with YouTube TV. The reason is the difficulty of negotiating with broadcasters, the need for ongoing deals, and the risks of channel blackouts.

Nevertheless, Roku is betting that niche subscriptions can generate sustainable profits. As of 2022, Frndly TV was already showing positive momentum and profits despite a limited audience of around 700,000 subscribers.

Frndly TV has already been showing positive momentum and profits despite a limited audience of around 700,000 subscribers.

Direct integration with the Roku platform

Roku CEO Anthony Wood said the company will aggressively promote Frndly TV on the platform’s home screen – similar to how it has promoted The Roku Channel since its launch in 2017. This strategy allows Roku to maximize viewing time within its ecosystem and maximize revenue.

Users connected to the Roku platform will be able to subscribe to Frndly TV directly, without third-party apps or services. This creates a closed-loop monetization model, from display ads to pay-TV.

Possible expansion of the TV package

Although Frndly TV is primarily focused on entertainment and family channels, the industry suggests that Roku won’t limit itself to just that suite. The company has a technical base, a user base (over 90 million households) and now its own sales funnel.

If Roku starts signing new contracts with media holdings, it can expand its offerings to include news, sports and entertainment channels, create flexible pricing and integrate everything into Roku’s standardized interface with a unified billing system.

This approach could appeal to users who want to retain access to linear TV without subscribing to cable packages. Roku could then offer the easiest and most convenient alternative to traditional TV. But only in the U.S., of course.

The story Roku buys Frndly TV and launches pay-TV service was first published on ITZine.ru.