Fox Roku Dispute

Fox/Roku Dispute, & A Look Inside AVOD Business Model

What’s the cause of Roku’s removal of FOX?

On Thursday, January 30th, Roku announced they will be removing all Fox Broadcasting related apps from their platform, just days before the Super Bowl. The timing of this announcement highly inconvenient to many users, however the date was likely chosen for a purpose, not bad luck. What’s the cause of this? Well, neither side is conceding, however, as with most disputes, it’s likely over money.

Roku is known to have a 70/30 inventory split among channels, which can be seen here: https://developer.roku.com/docs/features/monetization/video-advertisements.md , look under Featured Camparison > Inventory Split and you’ll see. What does this mean exactly? It means any channel that airs on the Roku platform, and serves it’s own ads, needs to give up 30% of commercial time to Roku. Sound extreme? Well consider this, similar arrangements are given to pay cable operators like Comcast, which is why you see ads for local & regional banks & restaurants while watching A&E or Discovery, probably about 4 ads per hour. While this likely isn’t 30% of cable TV ads (I think Walking Dead would run only 42 minutes when OnDemand. Absurd), keep in mind, that is with a provider who consumers pay upwards of $100/month nowadays. However, unlike cable operators, Roku is responsible for little in terms of customers upkeep. No outages to handle, transformers or wiring to replace on the streets. One thing I feel Roku did prove however, was that a ‘rental fee’ for devices such as cable boxes or modems are unjust, as the devices market for around $50. Remember when DVD players & Blu-Ray first hit the market, at $200-$300 dollars?  Today they can be found for around $30, neither would have warranted an $8/mo rental fee.

Now, it’s possible Fox already has a lesser amount to allocate to Fox, as possibly there are negotiations made with larger channels seperate from smaller ones following the general guidelines put forth. However, that aside, it is likely a cause of dispute and negotiation. Unlike smaller channels like my own, or even those larger such as Tubi or Crackle, Fox shows can bring a premium, especially when airing sports such as NFL, College Football, or Nascar. Is the value of what Roku brings to Fox greater than that of which they offer Tubi?  Or could Fox have a point here, that the amount of ad income Roku earns off each channel should be a sliding scale, with a premium channel such as there’s offering fewer advertising slots to the device. On the flip side, if Roku were to budge on this, it could open up quite a slippery slope as other channels begin to also consider themselves ‘Premium’ or top notch. Lose the battle, win the war.

Timing Of The Super Bowl

Now, does this mean that Roku was requesting 30% of advertising during the Super Bowl, and Fox reneged?  I find this unlikely, as ad inventory for premiere events are booked weeks if not months in advance, both Roku & Fox would have been aware of who’s inventory it was to sell, and how much, contractually, was allotted. What is likely, is that this was a set deadline, chosen long ago, as the end of a previous ad split agreement, with the date selected as a form of power move tactic for Fox to maintain an upper hand in future negotiations.

It seemed to work. Roku’s message board & Facebook page seemed to blow up overnight, with numerous duplicate threads being created, while the main one managed to reach 49 pages of threads and 480 posts. Mostly angry, many threatening to switch devices, some meandering into conspiracy (believing Fox News right wing leanings was the reason). Could the vast negative feedback have been too much for Roku?  Did management take note or receive word they weren’t being viewed in a favorable light?  Did Roku underestimate the significance and importance of the Super Bowl to US consumers?   People WILL go out an buy a $40 Fire TV stick to watch the Super Bowl, and likely never reconnect their Roku back up. If so, at some point on Friday night they became woke, and what the cause was of the bitter dispute, seemed to, for the time being, be resolved.