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Roku Pressuring Video-Makers for a Cut of Their Profits

by Jacob Kleinman | October 13, 2014October 13, 2014 9:00 pm PDT

Roku 3 in the Woods - 02

Roku offers all of the big streaming channels you’d expect, including NetflixHBO Go and YouTube, but the popular set-top box also features over a thousand smaller streaming content brands. That wealth of options has long been Roku’s claim to fame, but it may also be a significant source of revenue for the independent company. It turns out that launching a streaming channel is free, but operating a successful one may cost you.

According to GigaOm, Roku has already approached a handful of popular channels and demanded new deals that give the company a cut of streaming revenues. Roku is apparently asking for a share of profits that come from ads, subscriptions and pay-per-view purchases. There’s no word on what happens if publishers refuse to cut a new deal, but many say they’re too scared to find out.

Roku’s general manager of content and services Steven Shannon claims the company won’t remove a channel from the service for refusing to play ball. However, one publisher claims the company suggested it wouldn’t be able to update its channel in the future if it didn’t agree to a new contract. Roku is apparently promising extra promotion in exchange for a cut of revenue, which can help boost a channel’s popularity and profits even more.

It’s been great to see Roku evolve from a small startup to a major player, but it’s not too late for the company to lose everything in the face of tough competition from the likes of Google, Apple and Amazon. If Roku scares off its partners that could easily be its fate, but the company also needs to make a profit if it wants to stay in the game. It’s a tough spot to be in, but it’s something the firm needs to figure out if it wants to succeed.

Gigaom

Jacob Kleinman

Jacob Kleinman has been working as a journalist online and in print since he arrived at Wesleyan University in 2007. After graduating, he took a...

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