Roku found the way to Wall Street’s heart with a new strategy: free stuff!
The streaming video company’s stock was up more than 6% at Thursday's close on the heels of its decision to "unlock" more video content from some of pay television most popular series.
Roku users will get a taste of shows like On Becoming a God in Central Florida from Showtime, EPIX’s Godfather of Harlem, America The Story of Us (HISTORY Vault), Heartland (Dove Channel), Miss Fisher’s Murder Mysteries (Acorn TV), and more, with no subscription or even trial required. After sampling the series, viewers can follow an easy one-click sign-up to begin a free trial or start a subscription.
“I think it’s great that more content is becoming available for free on an ad-supported model for consumers,” says Dan Rayburn, Principal Analyst, Frost & Sullivan. “However, I think it’s fair to say that a vast majority of consumers are looking for premium content. I think it’s great that you can watch a few episodes of something for free. What Roku’s really doing here is giving people a taste of content; I just think of it as like a trial.”
The stock has been battered recently, dropping well off its 52-week high of 176.55 in early September. Two weeks ago, the stock dropped 30% and one analyst, Pivotal's Jeffrey Wlodarczak, announced a price target of $60 per share on Sept. 20. That was balanced by Oppenheimer Funds upping their target from $120 to $155.
This is part of Roku’s plan to offer more premium subscription services through The Roku Channel, as well as offering 80,000+ free, ad-supported movies and TV episodes, more than 35 live and linear streaming services and tons of amazing Kids & Family entertainment.
Roku recently introduced a "Kids & Family" option on The Roku Channel, making it simpler for kids and parents to find a great selection of free content available, as well as through Premium Subscriptions available in one, easy-to-access destination.
The one thing is that it is unclear what effect – good or bad - this will have because “no one shares data,” says Rayburn. “To Roku, it’s good because, obviously, they get permission from Showtime and Epix and others to say, ‘ we want to give away a little bit of your content for free, in the hopes that people like it and they sign up for a subscription.’ It’s not costing Roku anything.”