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Roku adds 23 more Quibi shows as it pursues original content strategy

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The Roku IPO at the Nasdaq, September 28, 2017.

Source: Nasdaq

Roku said Monday it will add another 23 shows from Quibi to its collection of “originals” as it tries to build on its ad-supported content strategy.

The shows include more of the content it bought from the now-defunct streaming service, including four that had never previously aired. Roku said in January it had acquired the rights to more than 75 shows from Quibi. It debuted 30 of those shows in May.

New shows include ten-part docuseries “What Happens in Hollywood” and “Eye Candy,” a competition series hosted by Josh Groban. The shows will stream beginning on Aug. 13 in the U.S., Canada and the U.K. 

The company licenses content from other media companies and has also bought shows, including “This Old House,” which it acquired earlier this year, for The Roku Channel. It generates revenue by selling ads against the programming.

Needham analysts said in a note last week Roku’s content goal is to maintain an ad-supported video-on-demand business model without negatively impacting gross margins from content creation. 

The Roku Channel “continues to broaden its reach by growing niches,” the analysts wrote. “Total streaming hours doubled at [The Roku Channel] in 2Q21, driven by its flywheel of creating new Roku originals, which leads to more viewing hours, which attracts new advertisers, which drives higher ad revs, which Roku invests into new original content, etc.” 

Needham analysts said the originals are attracting new advertisers to Roku. 

Evercore ISI analysts said they expect Roku to continue to be opportunistic in buying content to capture more connected TV ad budgets. 

“But we also believe these investments should serve as a strong moat of product differentiation that may well lead to superior pricing power for Roku over time,” they wrote. 

Roku reported second-quarter earnings last week that beat expectations but showed streaming hours in the quarter decreased by 1 billion hours from the first quarter of 2021. The company said “tight component supply conditions and shipping constraints” continued increasing costs faster than expected.

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