Flipping And Flopping On Freevee, The Real Story Of The Walmart-VIZIO Deal
1. Flipping And Flopping On Freevee
On Wednesday, Adweek ran a story, citing several anonymous sources at Amazon, asserting that the company’s erstwhile FAST service, Freevee, was about to be shut down, or “sunset” to use the current euphemism.
Hours later, however, the empire struck back, with multiple pieces in Deadline, Variety, AV Club and other industry trades, claiming that no, they were not in fact planning to sunset Freevee. Liar, liar, pants on fire.
Freevee, for those of you unfamiliar with it, is the FAST service that started life in 2019 as Freedive, then became the ever so mellifluous IMDbTV, and then, finally, Freevee. The fact that it’s had three names in five years pretty much tells you everything you need to know, but to state the obvious, Amazon has never quite known what to do with it.
Mostly, they’ve never allowed it to be its own entity.
Sure, it has its own app and all that, but the majority of people encounter it when they search for something on Prime Video and are presented with the option to either rent the show without ads or to watch it for free with ads on Freevee.
Now I don’t think I am going too far out on a limb in saying that a lot of people—perhaps even most—assume that “Freevee” is just a cutesy word that Amazon invented for “free with ads.” Versus being, you know, an actual separate service.
Amazon’s content offering is confusing AF, what with some things being free and others not, and some seemingly “free with ads” so most users don’t think much of it, given that Amazon’s main value for them is the free two-day delivery.
The other thing to note about Freevee is that it has a lot of original content. Including what is arguably the most popular original series on a FAST service, Jury Duty, recipient of four Emmy nominations this year (Comedy Series, Supporting Actor, Writing and Casting.)
Which may explain all that flipping and flopping.
Why It Matters
There are three possible explanations for what happened here.
The first two are the obvious ones: the decision to sunset Freevee wasn’t yet final when those unnamed sources spoke to Adweek, or Amazon decided the sunsetting was far enough down the road that they could deny things for now as they continued to tie up loose ends, legal and otherwise.
Then there’s the third one, the one I suspect may be the actual story: Amazon is moving Freevee from Prime to Fire TV.
It makes sense on so many levels. Fire TV, for those of you unfamiliar with it, is Amazon’s TV operating system as well as the name of its streaming device.
Fire TV already has its own content plays separate from Prime, especially around local news.
And while most American Fire TV owners likely already have a subscription to Amazon Prime, Amazon is looking to roll out its interface and its dongles and television sets internationally.
It’s part of the OS Wars, and you’ll be able to read a lot more about it next month when we launch the first part of our Special Report.
Having Freevee as the backbone of the Fire TV OS makes a lot of sense for Amazon, as all that high quality original content is going to give it a leg up over the competition, which is still mostly focused on library content and non-fiction.
Amazon has also been clever about what original content they produce for Freevee.
Much of it has been spinoffs from long-running Prime series like Bosch. Which is a great way to get people to either watch more Prime or (better yet) subscribe to it.
Freevee On Fire is also a smart way to expand Amazon’s advertising reach. Rather than just selling to the millions of users who now find themselves on ad-supported Prime, Amazon can also sell against millions of Fire TV subscribers on Freevee. All while using data from one to inform the other, and vice versa.
Finally, moving the “free” option to Fire means that anyone who wants to watch Prime is going to have to pay for it. That makes Prime Video’s business proposition a lot easier for consumers to understand, which is going to be key as Amazon continues to invest in live sports and needs to keep all those fans from churning.
What You Need To Do About It
If you are Amazon and moving Freevee to Fire is not actually what you are thinking, WTF? Because it definitely should be.
You are in the midst of a ferocious battle with Google and a bunch of CE manufacturers and independent players. So building your OS around Freevee makes a lot of sense for all the reasons laid out above.
Consider too that it (a) already exists and seems to work quite well from a tech standpoint and (b) has a low enough profile that it won’t seem like a force-fit bolt on, and you’ve got two more reasons to move in that direction.
If you are one of the other OS providers, you’ll want to consider how to react to this. Striking a content deal with one of the major media companies to juice your FAST service seems like it would be a smart option—you get content, they get distribution and you both get a lot of data.
Think about it.
2. The Real Story Of The Walmart-VIZIO Deal
Walmart agreed to buy TV manufacturer VIZIO this week in an all cash deal.
Which is pretty much all we know at the moment, other than that Mike O’Donnell and the rest of the team William Wang put together did a bang up job of getting VIZIO to that point.
So rather than waste your time (and mine) speculating about what may or may not be true and rambling on about the value of data, I’m going to focus on something we do know about, and that is the story of Roku and how the news of this deal impacts where they sit in both the industry’s and Wall Street’s estimation.
Roku, it’s fair to say, is an anomaly.
It is the largest (or one of the largest—measurement on this is all over the place) operating systems in the U.S. and pretty close to a household name.
And yet mention Roku to a European and you are likely to get a blank stare. Even from people in the industry.
It’s not that Roku hasn’t tried to expand outside the U.S. And to their credit, they’ve had success in Canada and Latin America.
Europe, however, has proved to be a stumbling block.
Why It Matters
Executives in the region have all told me the same story. It’s hard to know which came first, la poule ou l’oeuf, das Huhn oder das Ei, but that Roku’s troubles boil down to this:without enough apps on the platform, consumers won’t adopt it en masse, and without enough consumer demand, streamers won’t invest the time in creating apps for it. The fact that those apps will then have to be developed in some 27 or so different languages does not help.
That is different from the U.S., where Roku was one of the first out of the gate and streaming services were tripping over themselves to create apps for the platform (all in English, mind you), thus ensuring high consumer demand.
So there’s that, and there’s the fear that Walmart, whose strong support has been instrumental to Roku’s growth, will pull back, now that they’ve got a TV brand of their own.
That’s a tricky one—trickier than Wall Street, never known for its embrace of nuance, can process.
On the one hand, Roku clearly will no longer be Walmart’s golden child.
On the other, Roku’s been around long enough to have built up quite a fan base. Which matters, because unlike many of its competitors, Roku’s interface is fairly unique.
In the aforementioned Special Report, we refer to Roku’s interface as The Grid—it resembles an iPhone screen—versus that of most other OEMs, which we call The Array—they offer a range of viewing options via multiple tiles on the home screen.
Point being, for a lot of U.S. users, Roku is not going to be interchangeable and they are going to seek it out, either the dongle or a Roku-OS TV set.
And it is on Roku to make sure they’ll be able to find it, whether that’s from Walmart, Costco, Best Buy or a beefed up online DTC sales effort.
So there’s that, and then there’s the fact that Wall Street has never understood Roku. I cannot tell you how many calls I’ve had with investors where the whole “it’s a floor wax AND a dessert topping” play (hardware and advertising) seemed to make their brains short circuit.
It stems, I’ve come to believe, from Roku’s unlikely success. They managed to beat out Amazon (too messy), Google (no remote) and Apple (too expensive) to dominate the streaming device market and that unlikely success creates an underlying conviction that the bubble is about to pop.
And so once again, the fact that Roku, long rumored to be an acquisition target for everyone from Microsoft to Apple to Disney to Meta, was not, in fact acquired, has refueled suspicions that Roku’s success cannot be real and that the glass is not just half empty but draining rapidly.
What You Need To Do About It
If you are Roku, stay the course. Wall Street frequently is confused by “Little Engine That Could” success stories and the fact that “Who Will Buy Roku?” is the closest thing the industry has to a parlor game doesn’t help.
Your numbers have been very good this year—80 million “active accounts” who watch an average of 4.1 hours a day. What’s more, you have a loyal fan base as well as enough people watching The Roku Channel for it to make Nielsen’s The Gauge list. Which is pretty impressive given that the audience is limited to Roku users. (And those Fire TV users ambitious enough to find The Roku Channel on their TV.)
Yes, everyone is cutting back on the sorts of promotions that were once your bread and butter. But we firmly believe that as the various SVOD services grow their ad-supported user bases (and Amazon’s recent “everybody into the pool” switch is helping big time with that), then more than enough ad dollars will flow into streaming to make up for the cutback on promotions and then some.
Finally, vis a vis Europe. You may already have done so, but if not, it may make sense to offer to build some of those apps gratis, or even offer to pay to build them, to ensure that Roku has greater consumer appeal. Anything to break that chicken/egg cycle.
Also Check Out:
The Great Unwatched: Ad Overload in the Age of Streaming (ADOTAT on YouTube)
It's Time for Streaming To Put Sports Fans Back in the Game (NextTV)
