In line with recent rumors, Roku (NASDAQ:ROKU) confirmed last week that it will indeed acquire the distribution rights to Quibi's content library in its biggest push into exclusive content yet. Quibi flamed out spectacularly last year just six months after launching, in part because its content didn't seem to resonate with consumers despite having a star-studded lineup across a portfolio of shows.

Can Quibi's content work better on Roku's platform than its own?

The Roku Channel displayed on a wall-mounted flatscreen TV, with furniture nearby

Image source: Roku.

What's included in the deal

The deal includes 75 shows and documentaries that Quibi had spent over $1 billion to produce. Financial terms weren't directly disclosed, but The Wall Street Journal says that Roku is spending less than $100 million to secure the distribution rights.

Note that Roku isn't acquiring the content outright, but merely just the exclusive distribution rights for the remaining two-year window that Quibi had already established with content creators, which include many prominent Hollywood studios and media companies. After that time frame, Roku will be able to continue showing the content until 2027, according to WSJ. Additionally, there will be over a dozen new programs that were produced but never premiered on Quibi before the service was shut. That content will debut for the first time on Roku's platform.

The shows and documentaries will become available for free on The Roku Channel later this year. The reported price tag makes it a rather affordable bet for Roku, and the company has plenty of time to recoup the costs with ad revenue.

Same content, different strategy

There are several differences between Roku's strategic plans and Quibi's. Perhaps most important is that it will offer the shows for free, supported with ads. Quibi, on the other hand, had two different paid tiers: $5 per month with ads, or $8 per month without ads.

On top of that, Quibi launched as a mobile-only experience. You could only watch the short-form shows on mobile devices, an approach that was off-putting to many consumers. Quibi quickly tried to pivot to support TV viewing, particularly since the service launched just as the pandemic was forcing much of the world to shut down and stay at home. The initial idea was that people could enjoy the shows while commuting on public transit, but then everyone stopped commuting.

The whole strategy wasn't compelling enough to get consumers to open their wallets, particularly with intense competition among streaming services that offered more features and/or deeper catalogs for comparable prices. But putting Quibi's shows for free on actual TVs while leveraging a streaming channel that has an audience of nearly 62 million people and uses increasingly sophisticated advertising technology? That just might work.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.