Roku buys Quibi Library, jumping into original content for the first time

High-flying equipment maker Roku made its first foray into original content, purchasing the library of about 75 failed Quibi-commissioned startup displays for less than $ 100 million.

Roku shares, which jumped more than 10 percent Thursday, rose another 5 percent today after breaking the latest news. Shares were approaching $ 399 as the week’s trading came to an end.

The company said earlier in the week that it had exceeded some key metrics, with 51.2 million homes using its streaming devices, up 38 percent in a year. He also said that listeners watched 58.7 billion times in 2020 on their Roku Channel, a free streaming app where advertising revenue and membership fee generate much of its profit. That represented a 55 percent jump in watch time compared to 2019.

In response, Needham analyst Laura Martin raised its price target for the company from $ 315 to $ 400, writing to reporters “Roku has won the streaming wars.” With the last two days of price running, even that new target could be low.

But Quibi’s contract marks a new end, which could be challenging for Roku. Quibi was the first of the high-profile video membership services launched in the past 15 failed months, having raised $ 1.75 billion and commissioned a wide range of shows. from some of Hollywood’s most prominent creators and companies.

The displays, even feature length projects, have been designed to be viewed in 8- to 10-minute events on mobile phones, and have been created in the novel mode of “Turnstile” which allows full-screen viewing whether the device was held in a landscape-view picture or ratio.

The mobile-only approach was proven to be a problem in the midst of a pandemic, however, contributing to Quibi’s rapid shutdown in October after six months of operation. Initially the site did not allow shows to be “thrown” from phones to connected TVs and other larger screens, although this was exactly what listeners wanted to do when they were at home during the early months. pandemic with little to do but watch TV. These displays will now be available on dozens of streaming devices and screens of all sizes.

In total, Roku’s build will include around 75 shows, including some that never had a chance to debate Quibi before it closed, the Wall Street Journal reported. The price for the shows was reported by several sources as less than $ 100 million.

The demonstrations will be exclusive to Roku Channel for the balance of two-year windows that were part of the original contracts between Quibi and the creators. In an unusual way to help hire those creators, Quibi had agreed in most contracts to control the shows for a total of seven years, with long-form versions of the shows go back to creators after two years.

The deal marks the first original programming acquired by the independent scrappy, which has long made money by distributing content from other companies. The streaming sticks and pucks, and the slow interface are firmly at the heart of the company’s success, although the Roku Channel is the largest source of its profits.

The channel is in fact a collection of live, serial and on-demand programming sourced from hundreds of services available through the Roku interface. It’s very similar to supported free services like Tubi, Pluto and Xumo, and they’re all available on Roku.

There is reportedly a fight over whether some of their content would be available on the Roku Channel for free with support for one reason that the apps for HBO Now are owned by AT & T and Comcast’s

CMCSA
Peacock was banned from Roku for months after its launch.

With the construction of Quibi, Roku will compete in a different way with some of the largest tech and entertainment companies in the world. It’s already against Alphabet, Amazon

AMZN
, and Apple

AAPL
, along with Vizio and Samsung, in the streaming hardware space, and Comcast, Amazon, Fox, and ViacomCBS in the supported free collection division.

Original content is a much more expensive and unreliable investment, however, as tech giants and Hollywood studios are getting into their trend of streaming. Disney

DIS
for example, the first year was exciting for their Disney + service, with nearly 90 million subscribers worldwide.

But even though Disney says it plans to spend $ 8 billion a year on original programming for its streaming outlets, analysts question whether that’s enough to compete with Netflix

NFLX
, which will spend $ 19 billion on programming in 2020, and which does not have a legacy broadcast, cable and theater work to feed it as well.

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