Roku (ROKU +5.29%) may have reportedly paid a pittance to acquire the content catalog of the shuttered Quibi streaming service, but it's making that deal pay off in a hurry. The debut of Roku Originals late last month -- fueled by many of the Quibi shows and chapter-sized films and documentaries -- is driving heady growth and impressive engagement to The Roku Channel.
The Roku Channel was doing just fine on its own before Quibi's vault fell into the lap beneath its raised bidding card. The app within all Roku hubs that offers free ad-supported access to more than 190 live linear channels along with a library that now tops 40,000 movies and television programs was already was already reaching an estimated 70 million people in the U.S. through the first three months of this year. With Quibi shows now among the most viewed content on The Roku Channel in just the first two weeks since launching on the hub this is shaping up to be one of the best content grabs in streaming history.
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Out of the ashes of a failed premium service
Quibi never stood a chance when it launched last year. It had celebrity-anchored talent, respected executives, and a marketing budget big enough to spring for Super Bowl ads. However, it was doomed the moment it limited distributions to mobile devices, compounded by its late arrival as a premium service.
Now we're seeing what happens when you take content that never found an audience with the platform that has proven to be an audience magnet. Roku accounts have grown by 35% to 53.6 million over the past year.
If the 53.6 million active accounts seems like less than the 70 million people watching The Roku Channel, keep in mind that each Roku account often serves an entire family. Many Roku users have probably never clicked into The Roku Channel, and you can't blame them with thousands of other apps available on the platform. However, Roku Originals is getting folks interested in Roku's namesake channel for free ad-supported streaming content. In the first two weeks following the Roku Originals launch on May 20 The Roku Channel has hit a record number of active accounts checking it out. The 10 most-watched shows on The Roku Channel in those first two weeks were all Roku Originals content.
It's not just a curiosity click or an errant tap, either. More than a third of The Roku Channel users have streamed a Roku Originals show, and the average user is streaming over nine episodes in those two weeks.
It gets better. Roku only added roughly 40% of the Quibi catalog when Roku Originals launched last month. It has another 45 shows that it will release throughout the year. It has also already approved a second season for one of the shows, the Kevin Hart-fueled Die Hart. Roku has also been picking up the pace to secure rights on content for The Roku Channel.
Will we get to the point where so much original content makes it less appealing to the major streaming services driving traffic and ad revenue Roku's way? We've already seen Roku start to play hardball in negotiations with a few prolific services. The bigger takeaway here is that Roku is becoming a legit media stock with an open runway to increase ad revenue per user, engagement, and its active accounts base. Quibi's loss was Roku's gain, and the future has never been brighter for the platform that survived.
