Fox and Roku are about to enter uncharted territory together.
On Monday, Fox announced that it will spend $22 billion to acquire Roku, whose smart TVs and streaming players are in 100 million homes worldwide. If the deal goes through in 2027 as expected, it’ll be the first instance of a major media company having full control over a major streaming TV platform.
While the two companies obviously see this as great news for them and their shareholders, they’ve left a lot of questions unanswered about what the deal means for Roku, its business, and its users. Here are a few that come to mind:
What becomes of Howdy and Frndly TV?
Roku’s two subscription streaming services have seemed more like side bets than core strategic pieces, which makes me wonder about their future under Fox.
Howdy is the more interesting of the two, in many ways resembling Netflix in its earliest years as a fledgling ad-free streamer. The catalog of movies and shows is small and largely forgettable, but it’s been building up thanks to recent licensing deals with Disney, Sony, and Warner Bros. Discovery, and the market data firm Antenna estimates that Howdy now has more than 1 million subscribers. Will Roku continue to invest in the service under Fox, and will Fox’s rivals continue to see it as harmless source of revenue from their back catalogs?
As for Frndly TV, Roku itself acquired this low-cost, rerun-centric live TV streaming service for $185 million last year. At the time, I thought Roku would try to expand the lineup and gain a bigger foothold in pay TV packaging. That hasn’t happened, and while Roku pushes Frndly TV aggressively on its home screen, it remains a niche service whose main draw is the Hallmark Channel. Does Fox really want to be a pay TV distributor itself, and if so, does this pave the way for a Frndly TV bundle that includes Fox channels?
Is Roku’s reach a bargaining chip now?
Fox and Roku say they’re committed to running Roku as “an open, partner-friendly platform” and to widely distributing Fox content. But on several occasions, Roku’s supposed openness has taken a backseat to the company’s business goals.
You might recall, for instance, when HBO Max and Peacock couldn’t launch on Roku because they weren’t offering favorable enough terms. Or when YouTube threatened to pull its apps from Roku. Or when Fox temporarily pulled its apps from Roku ahead of the 2020 Super Bowl, likely due to squabbles over shared ad revenue.
Pay TV distributors might reasonably wonder now whether Roku gets wrapped into future carriage negotiations. If YouTube TV or Fubo wind up in a carriage dispute with Fox, does that jeopardize their distribution on Roku devices? And as Fox seeks out new bundles with other streamers, does owning a major streaming platform give it the upper hand in negotiations?
For how long will Tubi and the Roku Channel stay separate?
Fox and Roku are both in the business of free, ad-supported streaming with their respective Tubi and Roku Channel services, and Fox’s CEO, Lachlan Murdoch, says that “our expectation is fully to keep [Tubi and the Roku Channel] separate.” He noted that the two streamers serve different needs, and that only a third of their audiences overlap.
But I find it hard to believe that they’ll stay apart for long. Both are free services filled with movies and shows from studios’ back catalogs, both have collections of linear TV channels, and both depend on scale to generate ad revenue. Besides, if Roku’s going to promote both services to its 100 million active streaming homes, the audience overlap is bound to shrink.
Surely it will make sense at some point to combine the Tubi and Roku Channel catalogs, ad inventory, and tech stacks, no? Insisting otherwise seems more like a way to dodge antitrust concerns, given the strong position of both services.
How much more biased will Roku’s home screen become?
Today, Roku heavily promotes its own content across its home screen. Howdy, Frndly, and the Roku Channel have home screen tiles by default, and the prominently advertised Live TV Guide menu feeds right into the Roku Channel’s linear streams.
Roku’s CEO, Anthony Wood, has already indicated it will promote Fox properties as well. That’s not surprising, but we’ve seen other platforms go overboard with self-promotion to the point that the home screen just becomes a distraction. (Amazon is the most egregious offender.) The new Roku home screen already feels like a delicate balancing act between useful and promotional content. How much more aggressive can Roku get when it has to start promoting Fox One, Fox Nation, and Tubi as well?
What happens to Roku’s smart home stuff?
Roku’s smart home products are such an afterthought that they didn’t even warrant a mention in Fox’s press release or investor presentation. The series of cameras, smart bulbs, and other gadgets seems to exist largely out of obligation to keep up with the likes of Amazon and Google, whose robust smart home ecosystems are tied deeply to their respective Fire TV and Google TV platforms. Roku doesn’t even design the products itself, as they’re based entirely on existing devices from Wyze Labs.
Maybe the Fox acquisition doesn’t change anything, but a little assurance would be nice given how much of an investment smart home gear can be, and how far from Fox’s core competency those products are.
Is there anything in this for consumers at all?
One other element that’s notably absent from Fox’s announcement: any sort of consumer benefit whatsoever.
Oh, there’s plenty of talk about how much reach the combined company will have, how much value the transaction will create for shareholders, and how much more invasive your targeted ads will become. But does any of this result in a better product for Roku users or Fox viewers? The two companies don’t have anything to say about that.