Roku unveils $2.99 ad-free subscription streaming service
The new streaming service, called Howdy, has a library of thousands of titles and nearly 10,000 hours of entertainment from companies such as Lionsgate and Warner Bros. Discovery. Titles include action movie 'Mad Max: Fury Road,' sports drama film 'The Blind Side' and drama series 'Weeds.'
'Priced at less than a cup of coffee, Howdy is ad-free and designed to complement, not compete with, premium services,' said Roku founder and CEO Anthony Wood in a statement.
The push comes at a time when many streaming services are raising their prices as they face investor pressure to become more profitable and the cost of production has increased.
But San Jose-based Roku — known for its software and connected TV devices that serve as a hub for consumers to select from various streaming options on their TV sets — sees an opportunity to capitalize on the growing demand for low-cost streaming options and generate more revenue on its platform.
Roku has had success with its own free ad-supported streaming service, the Roku Channel and has a more diversified business model than other streaming platforms.
The company makes money by selling devices and advertising and gets a cut of subscriptions or programs sold through its service. The business also makes branded TVs and smart home products.
The company has also sought to expand its content library, acquiring Denver-based subscription streaming service Frndly TV for $185 million earlier this year.
'Howdy is by far the lowest priced ad-free service offered by a major company in the U.S.,' said Brahm Eiley, president at Victoria, B.C.-based the Convergence Research Group in an email. 'In the U.S., Roku has been very successful in attracting viewers for free content with advertising so it's not surprising that Roku is trying some different approaches to the market.'
'With engagement of over 125 million people a day, Roku is the perfect partner to launch a more accessible complement to the higher-priced SVODs,' said Jim Packer, Lionsgate's president of worldwide television distribution in a statement. 'This service has the ability to scale quickly while providing us with a new way to monetize our content, and we're proud to be part of this new streaming experience.'
Roku stock declined about 2% on Tuesday morning to $84.24 a share.
Like other media companies, Roku has downsized in recent years. In September 2023, the company laid off 10% of its staff, its third round of staff reductions within a year, citing a weak ad market.
While Roku's platform business has been robust, its device sales have declined. Roku posted a net loss of $33.95 million in the second quarter on revenue of $1.1 billion, which was up 15% over the same period a year ago.
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