Roku’s Extreme Walled Garden Is A Bold But Risky Move

Roku announced an even more extreme version of the so-called “walled garden” today, in a press release that outlined how Roku’s version of Amazon’s Channel Store concept would work.

Viewers can subscribe to a range of services from Showtime, Starz and Epix to Noggin, Tastemade and Lifetime Movie club … from within the Roku Channel app. From the wording of the press release, it appears that viewers can access those services from within the Roku Channel app, but not via the services’ own apps. (The sentence Premium Subscriptions are only viewable within The Roku Channel gave that one away.)

That’s very different than Amazon Channels, where while you can subscribe to Showtime via Amazon, you still get to access Showtime via the actual Showtime app.

What Are They Thinking?

I’m kind of surprised that Showtime went for this. The other subscription apps in Roku's stable are all small enough that the additional subscribers they'll get from Roku will likely be worth the loss of branding.

But Showtime’s actually been killing it lately—they’ve got a bunch of hot shows including Billions, Patrick Melrose, Homeland, Shameless, SMILF, The Chi, Escape at Dannemora, and Who Is America?

That should be enough to get people subscribing and for Showtime (which is owned by CBS) to want those people to be able to use its own app, where it can track their behavior and promote its own shows.

(It’s particularly curious since no one would be surprised if CBS and Viacom merged thus year and then launched CBS All Access/Showtime/Viacom/Pluto-Flix as a competitor to Disney+, WarnerFlix and NBCUflix.)

So there's that.

We Know What Roku’s Thinking

It’s not too hard to see the advantage for Roku in creating this Extreme Walled Garden. By keeping viewers locked inside the ad-supported garden of the Roku app, they can:

(a) easily get them to watch more ad-supported programming after they’re done watching the ad-free subscription programming,

(b) increase the audience for their programmatically distributed addressable ad business,

(c) get a better understanding of their viewing habits,

(d) be among the first to put The Great Rebundling into play,

(e) create greater stickiness for Roku the app and Roku the company, and

(f) create a compelling use case for the Roku app, which will soon be available independently on iOS and Android, among people who don’t have a Roku stick, which also helps with reason (b).

So it’s sort of a “well, why the hell not?” situation for Roku.

The UX Thing

Part of the answer to “well, why the hell not?” lies in how viewers feel about the UX (user experience) of watching everything off of the ad-supported Roku app. Do they consider it a better experience to have all their TV shows in one place, with a single interface and discovery mechanism for both ad-free and ad-supported programming or would they rather watch Showtime shows on the Showtime app where they can get additional goodies like bios of actors or behind-the-scenes snippets or (most importantly) the ability to download shows.

(That last one would be a dealbreaker for me, personally. As someone who travels a lot, downloading is key.)

The second part of the answer is that other subscription networks might not be willing to play by Roku’s game. HBO, which is happy to play Amazon’s game, is notably absent from the new Roku app (though that may have more to do with the impending launch of Warnerflix) as are Hulu, Amazon and Netflix.

Now it’s entirely possible for Roku to create a successful business with the 25 subscription services they already have on board, plus all of their ad-supported library programming. There’s a lot of ad revenue to be had in that, along with a lot of user data. I’d have even more faith in their plan if they could figure out a way to add in local news to the ad-supported piece, since that seems to be the thing people miss most about old school linear TV, even more than sports, which, let’s face it, Roku is unlikely to get in any significant way. (Though local high school sports or a lesser NCAA league wouldn't hurt them.)

So Who Wins?

The unlikely winner in all this might just wind up being Apple, whose iTunes Store OTT-app aggregator plan demands nothing of you beyond a valid credit card. No ads to watch. No ad-supported programming to mix in, no data to track for ad-targeting purposes.

If only they did a better job of letting people know that.