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Roku soars past revenue expectations as it bets on streaming devices to boost growth

Over a month after Roku announced its first Roku-branded TVs, which will launch in the U.S. in spring 2023, the hardware company reported its quarterly earnings this afternoon, which showed Roku beat its own revenue expectations, reporting a total net revenue of $867.1 million for Q4.
The company previously cautioned investors of a shaky fourth quarter, predicting total revenue at around $800 million, a 7.5% decrease year over year. In Q3, Roku had total revenue of $761 million. Analysts predicted a year-over-year decline of 7% to $804.19 million.
However, the company’s Q1 2023 guidance is still cautious of the current macroenvironment. Roku predicts a total net revenue of $700 million.
Also, Roku recently announced that it surpassed 70 million active accounts globally in 2022, an impressive milestone for the company. It had 65.4 million active accounts in Q3. For comparison, rival Tubi, Fox’s free ad-supported streaming TV service, revealed yesterday that it reached 64 million monthly active users.
Plus, Roku had a 19% year-over-year increase in global streaming hours, with a total of 87.4 billion streaming hours in 2022 and 23.9 billion for the fourth quarter.
Despite the growth in accounts, Roku continued to see operating losses widen to $249.9 million, compared to a loss of $147 million in the prior quarter. Due to the economic challenges, Roku wrote in an SEC filing in November that it planned to cut 200 jobs in the U.S. between Q4 2022 and Q1 2023.
“We plan to continue to improve our operating expense profile to better manage through the challenging macro environment while building on our platform’s monetization and engagement tools and partnerships,” the company wrote in its letter to shareholders. “Through a combination of operating expense control and revenue growth, we are committed to a path that delivers positive adjusted EBITDA for full year 2024. Our platform and industry leadership positions us well for reaccelerated revenue growth as the ad market recovers and the shift to TV streaming continues.”
The company added that Roku’s operating system (OS), which will power the forthcoming Roku-branded TVs, grew to 38% of units sold in the U.S. Q4 2022, per NPD. This means Roku OS continues to be among the top-selling smart TV OS in the U.S. The new Roku-branded TVs, announced last month, were another significant move for the company.
Roku recently closed a few deals with major companies to boost its streaming business. For instance, the company closed a deal with Warner Bros. Discovery, getting 2,000 hours of movies and TV shows, including HBO’s “Westworld,” “The Bachelor,” “Cake Boss” and “Say Yes to the Dress,” among others.
Earlier this week, the company struck an exclusive programming deal with Pocket.watch, a kids and family entertainment studio, to bring more children’s content to the Roku Channel.
Also, Roku partnered with DoorDash earlier this month to give customers a free six-month subscription to DashPass and launched interactive shoppable ads for DoorDash businesses on Roku devices.

Roku ends 2022 with new milestone, tops 70M active accounts

Roku unveils its first-ever TVs designed and built by the company

 
Roku soars past revenue expectations as it bets on streaming devices to boost growth by Lauren Forristal originally published on TechCrunch
Roku soars past revenue expectations as it bets on streaming devices to boost growth

Tubi reaches 64M monthly active users as ad-supported streaming grows

Fox’s free ad-supported streaming TV (FAST) service, Tubi, reached 64 million monthly active users, the company announced today. The last time the company reported its subscriber base was in May 2022, when Tubi had 51 million. When Fox purchased the streaming service in 2020, Tubi then had 25 million monthly active users.
Fox recently reported quarterly earnings, which showed significant viewership growth at Tubi. Its total viewing time was up 44% year over year, with over 5 billion hours streamed in 2022. It’s likely Tubi viewership will increase even more since the streamer struck a deal with Warner Bros. Discovery, gaining more than 2,000 hours of WB-branded content.
Tubi claims to have the largest free streaming content catalog, with over 50,000 titles and more than 200 live TV channels.

Tubi reports record growth, expands original content and linear channel offerings

The latest monthly active user figure was reported alongside Fox’s annual research report, “The Stream: 2023 Actionable Insights for Brands,” which shows an increased interest in cheaper ad-supported plans. The company predicted that by 2024, one in three U.S. consumers would stream AVOD (ad-supported video-on-demand). This is likely due to subscription video-on-demand (SVOD) services hiking up their prices. Netflix and Disney+ were the most recent SVOD streamers to launch ad tiers.
Fox predicts that AVOD growth will increase by 9% in 2023 and 24% between 2022 and 2026 in total. Meanwhile, SVOD growth will remain “relatively flat,” the company wrote.
“As subscription costs continue to rise, nearly one in three streamers plan to reduce spending on streaming services this year,” said Mark Rotblat, chief revenue officer at Tubi, in a statement.
The report also stated that, within the past year, Tubi content was watched by one in five AVOD subscribers.
It’s pretty easy to see why AVOD services — especially free services — are becoming more and more favorable as they are closer in proximity to the cable experience, without the long-term contracts or hefty fees. Sixty-three percent of survey respondents said that free AVOD services are attractive because they typically offer more flexibility than cable and satellite TV and provide a more customized viewing experience.
Also, 45% of respondents said that they value streaming services with fewer ads. Tubi has arguably one of the lightest ad loads across AVOD services, citing between four and six minutes of ads per hour. However, the report found that less than one in five customers are still unsatisfied with the length of ad breaks on Tubi, but still prefer lighter ad loads compared to traditional TV, which has about nine or ten minutes.
For comparison, Peacock keeps the ad load around five minutes per hour. Disney+, Netflix and HBO Max aim for about four minutes.

Fox-owned Tubi expands its free streaming service to five Latin American countries

Tubi reaches 64M monthly active users as ad-supported streaming grows by Lauren Forristal originally published on TechCrunch
Tubi reaches 64M monthly active users as ad-supported streaming grows

YouTube rolls out new Partner Program terms as Shorts revenue sharing begins on February 1

YouTube will begin sharing ad revenue with Shorts creators on February 1, the company revealed on Monday. To prepare for the upcoming change, YouTube is starting to roll out new terms for all creators in the YouTube Partner Program. Creators need to accept the new terms by July 10 to remain in the program.
The major change to YouTube’s Partner Program will allow creators to earn money from ads that are viewed between videos in the Shorts Feed. Although the new revenue sharing model will replace the YouTube Shorts Fund, the company says it expects the majority of its Shorts Fund recipients to earn more with the new Shorts revenue sharing model. As previously announced, creators can apply to the program if they meet a new Shorts-specific threshold of 1,000 subscribers and 10 million Shorts views over 90 days.
As part of the new terms, creators need to accept specific monetization modules. The first module is called the “Watch Page Monetization Module” and allows creators to earn money from ads served on their long-form videos and YouTube Premium. The next module is called the “Shorts Monetization Module” and lets you earn money from ads that play between Shorts in the Shorts Feed and YouTube Premium. The last module is called the “Commerce Product Addendum” and is for features like Channel Memberships and Supers.
YouTube recommends that creators accept all of the modules to unlock their full earning potential on the platform. Creators that make Shorts and have accepted the new Shorts Monetization Module will become eligible for Shorts ads revenue sharing on their Shorts views starting next month.
As for how exactly the Shorts revenue sharing will work, it’s a bit complex due to music licensing. Each month, revenue from the ads appearing between Shorts will be added together and used to reward monetizing Shorts creators and cover the costs of music licensing. A portion of the total revenue will be allocated to the creator pool based on views and music usage across all watched Shorts. If a creator uploads a Short without music, all of the revenue associated with its views goes toward the creator pool. If a creator uploads a Short with music, the revenue based on its views will be split among the Creator Pool and music partners based on the number of tracks used.
Next, the creator pool is allocated to creators. YouTube explains that it will allocate revenue to monetizing Shorts creators based on their share of total Shorts views in the Creator Pool. If a creator got 5% eligible views out of all Shorts uploaded by monetizing creators, they will then be allocated 5% of the revenue in the creator pool. Creators will keep 45% of their allocated Shorts revenue. For instance, if a creator is allocated $1,000 from the creator pool, they will be paid $450.
It’s worth noting that non-original Shorts are not eligible for revenue sharing. Non-original Shorts are those that include unedited clips from movies or TV shows, re-uploaded content from other creators on YouTube or another platform, or compilations with no original content added. Shorts that receive artificial or fake views, such as from automated clicks or scroll bots, are also ineligible for revenue sharing.
With these upcoming changes, YouTube Shorts is poised to become TikTok’s biggest competitor. If creators can make more money via YouTube Shorts than on TikTok, they’re incentivized to make original content for the YouTube platform. No short-form video platform has quite figured out how to share ad revenue up until now, which gives Shorts a notable leg up on the competition.

YouTube targets TikTok with revenue sharing for Shorts, Partner Program expansion

YouTube rolls out new Partner Program terms as Shorts revenue sharing begins on February 1 by Aisha Malik originally published on TechCrunch
YouTube rolls out new Partner Program terms as Shorts revenue sharing begins on February 1

Despite challenges, Netflix says its ad tier is doing well

In November, Netflix unveiled its long-anticipated ad-supported tier which offers customers in select markets, including the U.S., the ability to offset the cost of a Netflix subscription by allowing their viewing to be interrupted with ad breaks. At the Consumer Electronics Show in Las Vegas, Netflix President of Worldwide Advertising, Jeremi Gorman, offered some initial insight into how the product has been performing as well as the streamer’s future plans.
During an interview at Variety’s Entertainment Summit at CES, the exec said the company has been happy with the debut selection of advertisers and their diversity.
“It’s really across the board,” said Gorman, of the variety of brands participating. “We’re seeing CPG companies, luxury companies, automotive companies…[and] retail. We’re seeing a broad swath.” This is also good for the consumer experience, she noted, as it means viewers won’t be bored by one car ad after another. “There’s a wide variety of advertising types, and I think we’ll continue to see that,” Gorman predicted.
The interview also touched on some of the early complaints and concerns about Netflix’s foray into ads.
Among them is the key pushback the company has been receiving over its high ad prices, asking for what one industry exec dubbed “Super Bowl CPMs.” Gorman, however, justified the pricing but admitted the market will ultimately dictate what sort of pricing Netflix will be able to get.
“From a supply-demand perspective, the premium CPMs are reflective of two things: one is that we just couldn’t take that many advertisers. We certainly didn’t want to disappoint anybody. Then secondarily, the premium content environment in which the ads run I think warrants a high CPM.”
Whether Netflix constitutes a “premium environment” is up for debate, of course. But Netflix seems to be adjusting its expectations.
“I think we’re certainly humble enough to very much understand we’re top of market, and in addition to that, the market will more or less dictate to us what are reasonable CPMs,” Gorman said.
Another concern about Netflix’s ad-supported service has to do with which content can include ads. As the streamer wasn’t set up as an ad-supported service to begin with, many of its content deals didn’t include AVOD rights (advertising video on demand). That means Netflix has limited ad inventory, and couldn’t even run ads against some of its own “Netflix Originals” if the deals didn’t include the proper rights.
Gorman addressed this as well, saying Netflix was actively working on the licensing issues.
“That’s progressing, as we speak, day by day. We’re renegotiating deals we made a long time ago,” she said, adding that the “vast majority” of content that people watch regularly is available in the ad tier surface. In the meantime, Netflix has about 85% to 95% of its content available on the ad tier, Gorman said.
Then there’s the real concern that, from a business perspective, offering a lower-cost tier has the potential to cannibalize Netflix’s existing subscriptions as customers drop to cheaper tiers at a quicker rate that’s not offset by growth in the ads tier. Gorman, though, downplayed those concerns saying Netflix customers historically have remained on the plan they’re currently on.
The exec, unfortunately, couldn’t speak to the uptake of the ads-supported product, as Netflix is poised to announce earnings, but said “we’re pleased with the growth we’re seeing.”
At present, Netflix’s ad tier is available in the U.S., the U.K., France, Germany, Spain, Italy, Australia, Japan, Korea, Brazil, Canada, and Mexico. The company has no immediate plans to expand, but longer-term would aim to target any larger ad market. In addition to ads, subscribers on the Basic with Ads plan have to deal with lower video quality (720p HD) and are limited to streaming from one device. They also can’t download content to their devices for offline viewing.
Going forward, Netflix aims to do a bit more than just running typical ads, including things like dynamic insertion of ads near moments that are relevant to marketers, single-show sponsorships, and more. It will also later allow marketers to target ads by age and gender.
Despite challenges, Netflix says its ad tier is doing well by Sarah Perez originally published on TechCrunch
Despite challenges, Netflix says its ad tier is doing well

Spotify considers rebranding Anchor to Spotify Creator Studio

According to a survey sent to creators in the Spotify for Podcasters program, the streaming giant might be doing away with the Anchor brand. Anchor, which Spotify acquired for $340 million in a deal that included the studio Gimlet, is a free podcast hosting service. In 2020, Anchor said that its service was used to create 1 million new podcasts, accounting for 80% of new shows uploaded to Spotify that year.
But now that Anchor has been part of Spotify for almost three years, the company appears to be considering a rebrand. In the survey, sent to some podcasters who have claimed their show on Spotify for Podcasters, Spotify’s user research team shared information about the possible rebrand, which is still being tested with potential users.
“Anchor and Spotify for Podcasters are now Spotify Creator Studio, the all-in-one platform for creators of all kinds (and sizes) to express themselves and find success on Spotify,” the sample announcement in the survey reads.
Image Credits: Spotify, screenshot by TechCrunch
Image Credits: Spotify, screenshot by TechCrunch
Currently, podcasters can join Spotify for Podcasters to access analytics about their show, even if they host with another service like Libsyn, Podbean or Buzzsprout. Those who host via Anchor have access to features like subscription monetization and video podcasts, but only listeners using Spotify are able to interact with that content.
If the proposed rebrand from the survey were to go through, Spotify for Podcasters would be rebranded to “Spotify Creator Studio – Unhosted.” Anchor would be rebranded to “Spotify Creator Studio – Hosted.” Both products would remain free.
Spotify’s survey of podcasters about this potential change indicates an interest in the rebrand, but that doesn’t mean it will come to fruition.
“At Spotify, we routinely conduct a number of surveys and tests in an effort to improve our user experience. Some of these end up paving the path for our broader user experience and others serve only as an important learning. We have no news to share on future plans at this time,” a Spotify spokesperson told TechCrunch.
Over the last few years, Spotify has made a number of podcasting acquisitions like Anchor and Gimlet. These include Podz, a podcast discovery platform, and Megaphone, a podcast ads company. For four of its recent acquisitions — Findaway, Podsights, Chartable and Sonantic — the company paid about $295 million.

Spotify buys Gimlet and Anchor in podcast push, earmarks $500M for more deals

Spotify considers rebranding Anchor to Spotify Creator Studio by Amanda Silberling originally published on TechCrunch
Spotify considers rebranding Anchor to Spotify Creator Studio