Roku to Launch Subscription Video Channels Business

Roku said on Wednesday it will begin offering premium video channels to customers for a subscription fee as it expands its free streaming video service.

Premium channels from CBS Corp's Showtime, Lionsgate-owned Starz and Noggin from Viacom Inc among others will be available to viewers of the Roku Channel, a free video service offered to owners of Roku streaming video devices.

The move by the device maker, which spun off of Netflix in 2008, resembles the lucrative channels business Amazon launched in 2015 that resold video services on an "a la carte" basis, which has been copied by a variety of rivals. Apple is expected to launch its own streaming video service that will adopt a similar model, people familiar with the plan have said.

Amazon's Channels business, which has been popular among subscribers of Amazon Prime and has been a big revenue contributor for participating media companies, is expected to have generated $1.7 billion in 2018, according to a recent BMO Capital Markets report, more than doubling since 2017.

Media executives say the channels business is popular because it removes hurdles for consumers to subscribe to the services where they are already watching television. Like Amazon, Roku will handle the billing for these services, allowing viewers to subscribe directly from the Roku Channel instead of needing to go somewhere else to plug in credit card information.

Roku's expanded Roku Channel will also be available to users of Roku's mobile application for the first time.

© Thomson Reuters 2018