Shocker: Roku Acquires Frndly TV
In a surprising move, streaming equipment and software company Roku announced it will acquire live TV streamer Frndly TV. On the surface, the deal may not make much sense. After all, conventional wisdom says the live TV audience is vanishing forever. But the Roku team thinks they now have an ace up their sleeve.
$8.99/mo.
In Roku’s quarterly earnings call today, Roku founder and CEO Anthony Wood said, “Linear is a is a form of of entertainment engagement that is very popular, and it’s actually growing in popularity. On our platform, linear channels — sometimes people call them FAST channels — these are streaming linear channels. They’re very popular and a huge form of engagement. There’s a lot of people that like to just flip the channel.”
Wood added, “I don’t think of (Frndly TV) as a virtual MVPD. I think of them as linear channels in a paid tier that we can grow: the paid tier of linear channels.”
Wood said he believes Roku can grow Frndly TV faster than the provider was growing on its own. That’s probably true. Roku is the most popular TV operating system and its user-friendly devices are really fun and easy to use. If Roku splashes Frndly TV across its home pages, it’s likely to pick up new subscribers who aren’t aware of the under-the-radar service.
If we read the tea leaves in Roku’s announcement and their quarterly earnings call, it seems Roku may fundamentally alter Frndly TV, possibly blurring Frndly’s lineup with their own Roku free channels. Users may scroll through their familiar Roku channels, only to see A&E, The History Channel, or Lifetime, then face a prompt to upgrade to the paid option to unlock the show.
Right now, Sling TV, DIRECTV, and Philo offer a completely free option with the bulk of their content available if users upgrade. Roku’s Frndly TV strategy could aim to replicate that. But unlike those other services, Roku gets to decide when and where its device and OS users will encounter the Frndly TV offer.
Roku is paying $185 million in cash for Frndly TV. That number includes $75 million held back that is tied to meeting performance goals and milestones over the next two years.
