Roku launches ad-supported video streaming service


As Roku prepares to kick off its $100 million IPO, the company is launching an ad-supported streaming video channel that will live on its platform.

The Roku Channel, which will be available free to viewers, will feature films from studios including Lionsgate, Metro-Goldwyn-Mayer (MGM), Sony Pictures Entertainment and Warner Brothers, as well as content from existing channel publishers like American Classics, Fandor, FilmRise, Nosey, OVGuide, Popcornflix, Vidmark and YuYu. The new channel is getting a phased rollout over the next few weeks.

“We’re always looking for ways to add value and make TV better for our customers,” said Rob Holmes, vice president of programming at Roku, in a statement. “With The Roku Channel, we’re responding to consumer demand and helping content publishers deliver content through a new experience that makes finding free entertainment easy for our customers.”

RELATED: Roku’s $100M IPO depends on further monetizing its platform

For Roku, the launch of an ad-supported video streaming service factors directly into the company’s plans to continue growing after its IPO. The majority of Roku’s revenue is still derived from device sales, but income from Roku’s platform is growing steadily, more than doubling in 2016.

In Roku’s SEC filing regarding the upcoming IPO, the company admitted that ad-supported viewing would play a major role on its balance sheet in the future.

“To date, the majority of the hours streamed on our platform have consisted of subscription video on demand content; however, in order to materially increase the monetization of our platform through the sale of advertising-supported video, we will need our users to stream significantly more ad-supported content. Furthermore, our efforts to monetize our platform through ad-supported content is still developing, and may not grow as we expect,” the company warned in its filing.

SVODs like Netflix still account for the lion’s share of streaming hours on Roku, but those services don’t have a material impact on Roku’s revenues.