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Roku Channel Is Seeing Staggering Momentum

By Daniel Sparks – Jun 19, 2021 at 9:05AM

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The pure-play streaming-TV company's expertise in connected TV, combined with its latest investments, is paying off nicely.

One major catalyst for streaming-TV platform Roku (ROKU -0.67%) that has been gaining traction lately is its Roku Channel -- a streaming service dead set on capitalizing on compelling market trends in connected TV. To give the channel a boost, the company recently launched 30 new original TV series on the platform.

Roku's investment in original content for the platform is looking as if it will pay off handsomely, according to a new press release from the company. "The first two weeks have surpassed our expectations, with millions of people streaming Roku Originals," said Roku Vice President of Programming Rob Holmes, "and provided a further demonstration of The Roku Channel flywheel, with great content driving record engagement that's appealing to advertisers seeking to reach the streaming audience."

Roku Originals logo -- purple and dark blue on a white background.

Image source: Roku.

A record two-week period for the Roku Channel

Roku's slate or original content comes from the company's recent acquisition of the 2020-launched mobile streaming service Quibi, which ended up shutting down after failing to gain traction with consumers. But the content, which features stars such as Kevin Hart, Liam Hemsworth, Jennifer Lopez, Anna Kendrick, and Idris Elba, is apparently thriving under Roku's brand and distribution.

"In the two weeks following the launch of Roku Originals, May 20 to June 3, a record number of unique accounts streamed The Roku Channel," Roku said on Friday. "Furthermore, the top ten most watched programs on The Roku Channel were all Roku Originals in this two-week period."

Roku added that more than 1 in 3 Roku Channel users streamed a Roku Original, "with users streaming over nine episodes on average."

A person watching TV while sitting on a couch and eating popcorn.

Image source: Getty Images.

Wild momentum

Roku released some telling statistics about the impressive momentum of its Roku Channel in its first-quarter shareholder letter. The service saw record growth during the period, reaching approximately 70 million people -- up from 36 million people just one year earlier. Furthermore, Roku Channel streaming hours increased more than 100% year over year.

But this momentum isn't just good for Roku -- it's good for the company's content partners since the service is built to help promote the services on its platform. Viewership of subscription-based streaming services from within the Roku Channel grew at more than double the rate of viewership on the corresponding direct-to-consumer apps on the Roku platform.

Roku has said its Roku Channel benefits from a powerful flywheel: "[E]asy access to content with broad appeal attracts viewers, that viewer engagement attracts advertisers, and advertiser spend in turn allows us to invest in more content." The flywheel seems to be working -- and Roku is leaning into it. It already has plans to release an additional 45 Roku Originals this year, and management said in the company's first-quarter shareholder letter that its "content investment will continue to be commensurate with the scale and growth trajectory of The Roku Channel."

Daniel Sparks owns shares of Roku. His clients may own shares of the companies mentioned. The Motley Fool owns shares of and recommends Roku. The Motley Fool has a disclosure policy.

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