How being a “gatekeeper” in OTT ecosystem is moving beyond the cable box

hbo max and roku

Summary of Member Mailing #228

In this week’s PARQOR mailing, I wrote about how Roku “is a very specific type of gatekeeper: it controls access to OTT devices in the living room, whether it is a smart TV (one in three sold have Roku OS) or a stick; and, it aggregates demographic and viewing data on the viewing behaviors of those audiences in their living rooms. ”

Todd Spangler of Variety had a great piece on Roku’s new role in the TV ecosystem. The premise is that Roku has become a gatekeeper to an audience of 43MM+ users. This is true in the sense that it controls access to Roku users, but it is not true in the sense that it controls access to an audience that SVOD and AVOD apps otherwise cannot reach.

What does it mean for Roku to be a “gatekeeper”? A Wall Street Analyst quoted in the piece described it this way:

“We’re in a new world here. What you’re seeing Roku become is more than just an aggregation platform. They look closer to a gatekeeper, like cable TV companies used to be.”

I get why someone would think this: Roku has over 43MM user accounts, it will end 2020 with 52MM user accounts, and as a portfolio of devices replacing cable boxes in the living room, Roku controls access to all of these users.

But, this analyst is wrong. A Roku device is one device in the living room, and U.S. households own an average of 11 connected devices, including seven with screens to view content. Users do not need a Roku device to stream content the same way they need a cable box to watch linear cable channel programming on HBO or live sports.

Disney and Netflix also are redefining “gatekeeper”

This leads to a logical question: what does it mean to be a gatekeeper in a living room in 2020? Roku’s bet is on advertising. But, as I wrote above, apps aggregate more data cross-device about a user than Roku aggregates on a single device. Moreover, as we are seeing in recent news with Disney and Netflix, apps are able to change their own paywalls without needing to go through Roku.

As advertising evolves in the OTT/Connected TV space more towards performance marketing and more sophisticated ad targeting, Roku, Netflix, and Disney all suggest the business models for being a “gatekeeper” in that ecosystem will evolve with it, too.

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PARQOR Membership mailings highlight particularly valuable and notable connections between:

  1. Macro Level: broader, more directional (macro) trends in the streaming marketplace, and
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I also highlight connections how changes at the micro level in the marketplace are indicative of broader trends at the Macro level.

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