Roku’s New Way to Make Money

Roku‘s (NASDAQ:ROKU) ad-supported streaming service, The Roku Channel, is branching out to offers users more (for a price). Fulfilling a promise made in early January, Roku has rolled out the first premium subscription options for The Roku Channel. The move positions The Roku Channel to be an important new earner for Roku, and it suggests that streaming subscription hubs like the ones cultivated by rivals Amazon (NASDAQ:AMZN) and Apple (NASDAQ:AAPL) aren’t going anywhere.

The Roku Channel past and present

Roku offers the most popular streaming platform on the market. Its Roku devices offer users of subscription streaming services an easy way to access all of their content through one interface. Until relatively recently, Roku was content to organize content rather than provide it. Then came The Roku Channel, a free app for Roku’s own platform that gave streamers access to free on-demand content that Roku licensed from media companies or other free ad-supported streaming apps. The Roku Channel was available only to Roku users.

Now, Roku is looking to do more with The Roku Channel than offer free content to Roku users. In addition to that free content (which isn’t going anywhere, Roku says), The Roku Channel will now offer content from premium subscriptions like Showtime — provided, of course, that viewers pay for those premium subscription services. Roku will allow users to sign up for such premium subscriptions right there in the Roku app, and it will take a cut of the subscription fees. The Roku Channel will serve as a subscription hub, offering convenience to users while taking cash from subscription services.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Stephen Lovely owns shares of Amazon, Apple, AT&T, and Netflix. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Amazon, Apple, and Netflix. The Motley Fool has the following options: long January 2020 $150 calls on Apple and short January 2020 $155 calls on Apple. The Motley Fool has a disclosure policy.

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Roku’s New Way to Make Money

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