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CandW discuss Philo and Roku’s first quarter as a public company

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We discuss the new cable channel owned Philo vMVPD service and some of the cool things we spotted in the results reported by Roku after its first quarter as a public company.

Chapter 1: Philo and why it will struggle (2:00)

Will walks through the Philo announcement. The $16 per month entertainment-only vMVPD is targeted at non-sports viewers. The company has also raised $25 million from Discovery, Viacom, Scripps, A+E Networks and AMC, which are represented among the 37 TV networks included in Philo’s base tier. Another 9 TV networks are available for an additional $4 per month.

Chapter 2: Philo is a good deal for the cable channels and subscribers (6:00)

The channels that are a part of Philo will make considerably more money per subscriber than they currently do from pay TV operators. At $16, it also looks like a pretty good deal for consumers that decide it is a good fit for them. However, it will be tough for Philo to differentiate itself from competitors like Sling TV.

Chapter 3: Roku Q3 2017 results reveal new details of the SMP business (12:00)

Roku’s first quarterly filing as a public company gave us some insight into the whole streaming media player business. Firstly, active Roku users watch more than 50% of their TV time from streamed sources. Secondly, streaming media usage follows the same seasonal patterns we see in regular TV viewing. Thirdly, the streaming media player retain business is very low margin. Little wonder Roku is focused on the platform business, which delivers gross margins ten times higher than hardware sales.

Chapter 4: Advertising is driving growth at Roku (17:00)

Will observes that advertising sales are 75% of Roku’s platform sales. Roku’s other businesses all enable greater reach from advertising.

I sounded a couple of notes of caution. Roku has launched a company-owned channel. If it continues to expand the “owned and operated channels” it could create suspicion among content partners and platform licensees that the company is favoring its channels. The other issue is that I sometimes find it hard to find some of my lesser used channels on Roku. Other platforms, like Android TV, make it easier to find the apps and have a more modern look.

That said, everyone in my family still prefers to use the Roku over any of the many other devices available to them.

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