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Roku Launches The Roku Channel in the U.K.

By Evan Niu, CFA – Apr 8, 2020 at 10:20AM

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The streaming tech company plans to make big pushes abroad this year.

Streaming TV platform operator Roku (ROKU -9.25%) first launched The Roku Channel back in late 2017 shortly before the company went public. Unlike third-party ad-supported channels whereby Roku only gets a 30% cut of ad inventory, The Roku Channel was a first-party offering that offers free access to a large catalog of content. The Roku Channel has been instrumental to growing the company's platform segment, driving engagement while boosting ad revenue.

Roku is now launching The Roku Channel in the U.K. as it continues to eye international expansion.

The Roku Channel on a TV

Image source: Roku.

The Roku Channel continues to expand

The Roku Channel is now available to British consumers that have a Roku player, Roku TV, NOW TV device, or Sky Q box. The free service can be accessed without logging into the platform and will include localized content like popular British TV shows. There are around 10,000 movies, TV episodes, and documentaries in the catalog for British consumers to watch while stuck at home by the police-enforced lockdown as the country tries to stop the spread of COVID-19.

The news comes nearly two years after Roku launched The Roku Channel in Canada, which was the first international expansion for the channel. A couple months after that, Roku brought The Roku Channel to the broader web, making it available through any internet browser.

"Ad-supported viewing is one of the fastest growing categories on our platform and we are excited to meet the consumer demand for free TV," Vice President of Programming Rob Holmes said in a release. The Roku Channel is one of the top ad-supported over-the-top (OTT) streaming services, with an estimated 7% of U.S. households viewing the channel, according to Parks Associates.

International growth is one of Roku's biggest opportunities

More broadly, Roku has been laying the groundwork for a big push abroad. Roku's user base and business is still highly concentrated in the U.S. Late last year, the streaming tech company launched a new lineup of Roku TVs built by Hisense for the U.K. market.

"Streaming is a global opportunity and we continue to see great promise for Roku as we expand our reach in international markets," Roku wrote in its fourth quarter shareholder letter. "While we are still in early days, we believe the strengths that have made Roku the No. 1 streaming platform in the U.S. by hours streamed will enable Roku to be successful internationally as we drive scale, build engagement and begin to monetize in international markets."

The international expansion playbook is familiar: In other markets like Canada and Mexico, Roku has used the same strategy of first offering a combination of Roku players or third-party Roku TVs to grow an installed base before turning its efforts toward monetization and ad sales. Roku doesn't break out international operating metrics, but plans to eventually once those markets start to contribute more meaningfully to the business.

Evan Niu, CFA owns shares of Roku. The Motley Fool owns shares of and recommends Roku. The Motley Fool has a disclosure policy.

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