Roku and Google are still locked in a battle over terms for continued carriage of YouTube and YouTube TV on Roku devices and both sides stand to lose if no middle ground can be found.
The companies last week renewed their arguments—Roku is alleging anti-competitive behavior by Google and Google has accused Roku of making “baseless claims”—and warned that new Roku devices will lose access to the YouTube and YouTube TV apps on Dec. 9 if an agreement can’t be reached.
One of the most popular streaming apps not being available on one of the most popular streaming platforms would obviously be bad for consumers. But nScreenMedia Colin Dixon this week said the fallout will impact both Google and Roku in separate ways.
Google has recently seen big increases in YouTube advertising revenue thanks in part to increased connected TV viewing of the service. This week, the company said its streaming platform pulled in $7.2 billion in ad revenue during the third quarter, up 43% year over year. But that momentum could be stalled if YouTube and YouTube TV are no longer available to Roku’s growing user base, which currently sits at around 55 million.
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“The increase in CTV usage and the longer engagement times the device drives were important factors driving the ad revenue increase. Since Roku OS is the dominant CTV platform in the US, the dispute puts a significant portion of CTV ad revenue at risk,” wrote Dixon in a research note.
Roku is also largely dependent on advertising revenue and needs to keep users on its platform to maximize monetization. The 120 million people in the U.S. who streamed YouTube or YouTube TV on their TV screens in December 2020, according to data from Google, likely contributed greatly to Roku’s active user base.
“If users are forced to move to another platform to watch YouTube, likely more than just YouTube viewing time will move with it. What is more, new users will be less likely to purchase a Roku-powered device since it lacks one of the most important video streaming apps,” wrote Dixon.
Roku and Google have been at odds since April and it’s unclear how much the impasse has affected either side or their respective users. But if the Dec. 9 deadline passes without a deal, Dixon said it “could be a long, hard winter for both companies.”