Inside Roku's Sports Strategy — And What the Fox Deal Could Mean Next

0:05Hello, everyone, and welcome back to another edition of Streamtime Sports. I'm your host, Nick Meacham, CEO at SportsPro. Now, this episode is about a business that was recently valued at a way for$22 billion and their approach to sports. No matter who you are in sports and sports media, you've no doubt not only heard about this news, but are probably sitting there wondering what the future holds for sports on this platform. Yes, of course, I'm talking about Roku, who has recently agreed to being acquired by Fox for quite the number. Up until this point, Roku has been flying under many's radar when it comes to what they're doing in sports, but have a host of interesting partnerships across the sports ecosystem.

0:45So I'm thrilled to be joined by Joe Franzetta, who's the head of sports for Roku Media, to dig into more about their strategy for sports across the Roku channel and the broader Roku platform. Welcome to the show, Joe. Yeah, thank you, Nick. Appreciate it. Thank you for having me. So let's kick things off a little bit. We're still setting a bit of the scene as to really some of the stats and status of Roku as a business today, particularly as it relates to the sports strategy. So at a very high level, Roku is both a platform and a service. So we have the Roku platform, we have the Roku channel service.

1:21From a sports perspective, we look at ways that we can bring those two things together that is most advantageous to consumers, to viewers, to our distribution partners, to leagues, to brands and sponsors who want to reach them. Just to set context, as you said, Roku is a very large, largest connected television platform in North America, U.S., Canada, rapidly growing internationally. We have 100 million households. We are in roughly half of all broadband homes in the U.S. So the scale is and the reach is formidable. Excuse me. We have, you know, I always like to say that virtually all sports are on Roku somewhere.

2:03And as I'm sure you and viewers are aware, with the transition from the traditional linear television ecosystem into a streaming ecosystem, there are a lot of benefits, but there's also some challenges and some friction in terms of rights fragmentation, rights disaggregation, and creating an environment that allows viewers to seamlessly, easily get to the content that they want to get to, whether it's the live games or shoulder content or ancillary content. Our objective is to make that journey as simple as possible for viewers. And we've created a destination and a set of destinations really on our platform to address that, the umbrella being called the Sports Zone.

2:53And I can get into the details of that. And then we also integrate a lot of first party relationships that we have through the Roku channel into that same ecosystem. with the objective of making an aggregated sort of one-stop shop for a sports viewer to find the content that they want to find and to have as much of a personalized experience around that as possible. So how would you describe that difference between what is served in obviously your core market in the U.S. versus outside of the U.S. market? Just give us a bit of a more of a nuts and bolts sort of description on what that looks like?

3:29Sure. So, you know, we started our sports business, you know, outside of course of sports that are on our distribution partners, direct to consumer apps. We in the U S wanted to make sure that we made the journey of finding that content as easy as possible. So we started working with the distribution partners here with the league partners and the brand partners that were all sort of in the ecosystem and built out the sports zone in the U.S. and started building what we call sub zones or, you know, dedicated branded destinations with some of those league partners. So the NFL, the NBA, MLB, WNBA, NHL, NWSL.

4:13So we are building these destinations that are specifically branded destinations for these specific partners and their distribution partners. There are some instances where there's a single partner and there may be a tentpole opportunity like the Olympics or March Madness. And most recently, we built, you know, robust soccer destinations and World Cup destinations in seven different territories across the globe. And that was the U.S., Canada, Brazil, U.K., Mexico, Argentina, Colombia, I believe. I hope I got them. But in each case, the objective is the same, right? It is make the journey for a viewer as seamless as possible, present the available content to them in their territory.

5:00And that means different partnerships in different territories, because obviously the rights themselves are held by different partners in each territory. So we have to do integrations with the relevant partners in those territories. But the structure and the objective is essentially the same, which is we want to make sure people get to the content that they want to see. We want to personalize the experience and we want to create as much stickiness as possible for an always on experience. So in that instance, you're basically trying to create a single destination or a single entry point where all of the respective, say, FIFA World Cup matches in this instance would be listed and available for anyone to watch.

5:39you'd be relatively fairly frictionlessly away from clicking on and then consuming that content versus having to navigate from say platform or platform to platform to try and work out who's got what is that kind of the crux yeah that's that's like that is absolutely the crux of it that's the high level of it and then in addition to that how do we layer in things like clips and highlights or you know other shoulder content long form vod documentaries etc just creating a Again, a one-stop shop for all of the content that might be relevant. And then, you know, adding some data visualization, like, you know, who's the top goal score, the golden boot, you know, what are the standings in the various groups and personalization such as, you know, knowing who has a subscription to what service and making sure that we're highlighting that for each individual so that their specific individual experiences is personalized as possible.

6:41Can you give a sense, Joe, just people might say, listen to that and go, oh, yeah, that makes sense as a proposition and is what everyone would want. Can you talk about why that's been so difficult for actually the industry to have and to experience? Because it obviously hasn't been that easy. And that's why it's quite a unique proposition. Yeah, it's a good question. And I think others are sort of following on and taking cues from some of what we've done. You know, obviously, imitation is the sincerest form of flattery. So you're seeing more and more. Plenty of it in this industry as well, I have to say.

7:18Find what works and go with it, right? I think, you know, we recognized it. I think that we recognized it early on, as did others. But I think we were sort of uniquely positioned given our scale. And so all the contents on our platform and we have a significant reach in terms of in terms of users. So excuse me, it was a proposition that made a lot of sense. And and we endeavored to do it a, you know, really do it at the deepest level possible and making sure that all of the metadata that is necessary to drive this these experiences is connected. So you've got metadata about the games or the matches themselves, about the partners, about the start times, about the finish times, what channel it's on, on what, you know, if it's an MVPD, for instance, you know, what channel is it on, on that MVPD?

8:08If it's in a direct-to-consumer app, where exactly is the stream in that direct-to-consumer app? So it's one thing to, you know, put a tile on a screen and says, hey, here's the match, and you can click on it. And when you click on it, you just go to an app. It's quite another thing to build the plumbing such that you are directing people exactly to where they want to go. And then coordinating that among a number of different sports and distribution partners and leagues. So in some cases, you have a sport like soccer. In other cases, you might have a league like the NFL or the NBA. So there's a lot of nuance to the different ways that you're going to organize the content and then making sure that you get that all right from a data perspective, from a partnership perspective.

8:57And, you know, frankly, we have a team of people who are constantly monitoring, making sure that all the systems are properly connected every time we add a new territory, add a new sport, add a new league, just making sure that all of the details that ultimately are being presented frictionlessly to the user, that the plumbing underneath all of that is well connected and not leaking. So you have this sports zone strategy, which sounds like it, I'm guessing, is in a really good place in terms of bringing all these different partners together, particularly in a platform like Roku makes a lot of sense.

9:34Talk about the wider sports strategy. Obviously, you have a host of different sports partnerships in place that don't fall through the traditional distribution relationships you have with other platforms. How do you approach that strategy in those partnerships? So you're referencing essentially what we're doing on the Roku channel, which is where Roku acts as a service where we have first party relationships. And so in that world, as Roku channel as an app, effectively as a service, we have a number of different content partnerships. They can be fast channels. So, you know, dedicated sports fast channels.

10:10And we're, you know, constantly looking at the new opportunities there. That is a growing space and one that is getting increasingly more robust in terms of the programming that's available, live sports programming, you know, more robust original programming. So less and less of just an, you know, sort of archive content that is stitched together. So that, you know, content is continually growing and is something that we integrate into the sports destination. We have Roku sports originals. So we have sports originals that we ourselves will, you know, commission, produce, work with third party partners.

10:51You know, we and we work with a lot of our league partners on those. We've worked, you know, with the NFL. We've worked with MLB and their production partners. We've got a series now, an anthology series called Game Changers, which is focused on women's sports. And we've had a couple of those released. One was Ashlyn Harris. It was a story about Ashlyn Harris. One we just released around July 4th timeframe here was America's top 25 female athletes. So there's a lot of interesting things that we can do in sports original space. Sports talk has been important to us. It's a way to have a voice in the daily conversation, sort of that drumbeat of sports discussion.

11:32So because we're a platform and we have all sports on our platform, having sports talk that is general and speaks to a lot of different sports is a perfect fit for how we view the sports ecosystem. And then finally, live rights. And so we've done some live rights partnerships and we continue to look at new opportunities in that space. We've done partnerships with Major League Baseball, with Formula E, with Bassmaster. we now have really great partnerships with x games and with savannah bananas and in each case we're looking where where does the opportunity work for us to have a live rights partnership that can be supported by roku channels advertising and sponsorship business model that we think we can integrate into our larger sports experience and elevate in a way that it's going to pull people in.

12:27It's going to get people's attention. We put Savannah Bananas, for instance, on the home screen. We have a Savannah Bananas game this weekend in Minneapolis. That will be on our home screen. And you know, the Savannah Bananas are, at least here in the U.S., are really having tremendous growth and tremendous visibility. They're really an exciting league. We know that people will see that on the home screen. They'll click on it. They'll now be in the Roku channel, inside the Roku Sports Channel, which is our 24-7 fast channel dedicated to sports, where we do put all the, you know, the sports talk, the live rights, the originals that we aggregate and some of the licensed content that we aggregate.

13:05But by driving people into those experiences and pulling people into those experiences, we then introduce them to the larger ecosystem. So from our perspective, what we're doing in the first party rights, that is A, driving sponsorship demand. We have a lot of sponsors and, you know, brand partners that are very interested in that. And B, it is allowing us to create more activity around our larger sports ecosystem. So we look at those things as very complementary, sort of, you know, creating that virtuous loop of activity where we have first party content that's ad supported and, you know, free to the viewer.

13:40And that is integrated with our larger sports ecosystem that is a tremendous tool for discovery for all of our sports, you know, and distribution partner content or league partner content. And then, of course, all of it, you know, provides brands new and interesting ways to interact with audiences. And they're constantly looking for ways and, you know, pushing us, frankly, to find ways to get, you know, closer to the conversation, closer to the fan and the viewer, closer to the league's content. So we're another avenue and an interesting and I think unique avenue for brands to be able to be a part of that conversation.

14:19So all of those things sort of wrap together. So on the economic front, obviously you've referenced a few partners you have in place there and you're running the sponsorship and advertising model to fund and underpin the strategy behind that. Are you typically running a traditional media rights acquisition and then maximize that investment? Or is there a unique model that you're running where there's a shared outcomes aspect to that? How do you approach that? Yeah, we have all of the above really is the answer. I think we like to find partnerships where there's a shared upside because at the end of the day, we are investing in putting the content on our platform in valuable placements on the platform.

15:07We are driving conversations with sponsors. We know our league partners are, you know, creating incredible content and have, you know, a lot of investment associated with that in terms of production, in terms of distribution. And there's always a mix of how that business model works. And, you know, we're no different than anyone else in terms of looking at how the best opportunity in each individual circumstance is going to fit. We don't run sports based subscription service. We're not getting, you know, subscription fees or affiliate fees or retrans fees or any of those sorts of things. So everything does need to work within that advertising and sponsorship model.

15:49And then how we approach that with each individual partnership depends on the partnership. And, you know, we have several different flavors of how that works. I could imagine there'd be a few different sets of circumstances there depending on their partner, our partner mix as well, but that's all part of the fun. I want to take a little bit step and look more widely for a second and talk about how you see, I suppose, the challenge around fragmentation of content and rights in the industry. Obviously, Roku is one of the ones driving aggregation of that content into one single source and destination, as we just alluded to and talked about initially.

16:26Just talk us through how you're seeing that today. Is it getting better? Is it getting worse? And yeah, what's the future look like? Yeah, I think the fragmentation continues, but I think as an industry, we're getting better. And I think, you know, Roku is one of the leaders in this effort, but we're getting better at understanding how to re-aggregate that content in some respects, like not necessarily the same way that it would be in a cable bundle, but to take advantage of the digital platform and the interactivity and the one-to-one connection that we have with individuals. to make that experience more personalized, right?

17:04So I think as things go forward, there's a couple of different ways or a couple of different vectors that I look at. One is personalization and the ability to know what people want, both because of explicit signals that they tell us and implicit signals based on viewer behavior and subscriptions and all those sorts of things and making sure that the experience is personalized as possible. But we also want to make sure that we don't, you know, funnel people down a rabbit hole of some sort and say, well, this person watched this once. Therefore, that's the only thing they're going to watch. We want to continue to expose people to broader opportunities.

17:42And so we, through our algorithms and our editorial and merchandising, we're constantly, you know, making sure that that balance of presenting people what we know they want with things that we think they may be interested in is part of the process. So that's sort of one vector is the personalization. And then I look at the others. The other is really interactivity and then the relationship between the viewer and the broader ecosystem of sports that where it's not necessarily just, you know, fans wanting to watch a live game. Of course, that is the highest consumption model is the live sport. But also people want to consume clips and highlights.

18:26Well, let's make sure they have clips and highlights and let's make sure that it's relevant clips and highlights. People want shoulder programming. Increasingly, you know, looking at what is the creator role in the conversation? What is the role of the athlete as a brand and as a creator in their own right? How does that get integrated into the ecosystem? We're not a social platform. And I think, you know, understanding what you are and understanding what you're best at is really critical so that you don't spend a lot of time in cycles trying to be all things to all people, making sure that you are leveraging really the platform that you have, the partnerships that you have, and then experimenting with and layering in some of those other things that might exist on other platforms to see do they work in our environment.

19:16And if they work in our environment, how? We'll learn new things as we go. So I think those are the ways that as we move forward, while fragmentation and frankly, disaggregation of rights continues to be a trend and is not sort of, it's not coming back together the way it was in the cable bundle. I think that our ability to leverage the positives of that as opposed to worry about the negatives of that are continuing to evolve and I think continuing to shine. Obviously, the recent news of Fox acquiring the Roku business caught a lot of headlines. From your perspective, how does that look to impact your approach and your strategy to sports?

20:01Well, it's all to be determined, to be quite honest. I mean, it is something we're very excited about as a company. You know, we think that there's a lot of complementary business lines and strengths that we're really excited about. But until the transaction happens, it's business as usual. And, you know, business as usual for us is continuing to work with Fox and every other partner on our platform and making sure that we are doing what we can to help our partners succeed. because when our partners succeed, we, you know, feel it's cliche, but when our partners succeed, we succeed. So, you know, for the time being, it's business as usual, continuing to build out our platform, continuing to be a home for all things sports and for all of our distribution partners that have the rights, all of our brand partners who want to reach them, all of the league partners who obviously are creating the content and you don't want to continue to build relationships with viewers that are today in the ecosystem and viewers that we're trying to attract into the ecosystem.

21:10So to start wrapping up now, I want to talk about coming back to the platform and your ability to not only bring on sports partners, but also turn that into value for Roku as a business, as well as for fans. Just how are you finding the marketplace now when it comes to, I guess that you've talked about, you alluded to, or you touched on it briefly about the demand for advertising and the monetization through those means. Relatively speaking, streaming monetization through advertising is only fairly new in terms of its growth trajectory. It really seems to be picking up momentum. Are you seeing the interest in live sports, particularly the advertising and sponsorship opportunities around live sports, picking up?

21:51Or is it just sort of consistently growing at an organic rate? No, I think it's picking up at an accelerated rate. And that is both video and sponsorship. And, you know, I can't speak for others and how they approach it. But from our perspective as both a platform and a service, we're able to provide experiences that brands can participate in that are, I think, unique and differentiated and create new inventory, frankly. So it's not just shifting, you know, your spots and dots from here to here. It's creating new opportunities and new types of experiences and inventory that sponsors and brands can, you know, increase their spends around because it is fundamentally a different approach than they are used to having available to them.

22:37And then from a platform perspective, yes, we look at obviously sponsorship and advertising is a significant driver for our sports business on our platform. We also look at what does the future hold in terms of other revenue streams, right? I think that as an interactive platform, as a digital platform, there's a lot of things in the sports ecosystem that traditional linear television is not able to participate in, whether it's sports wagering or merchandise sales or even food delivery or ticket sales, all those sorts of things come into play. Also, from a Roku perspective, I think differentiating our platform.

23:17So we do interesting things at the platform level that integrate our sports partners. And I'll give you one example, Roku City, which is a beloved screensaver that is, you know, the darling of social media. And, you know, people are right now looking at Jimothy the raccoon and, you know, spotting that Easter egg in Roku City. We did an integration with the Savannah Bananas where we put their historic Grayson Stadium from Savannah, Georgia into Roku City. You were able to click on that. You enter into an interactive version of that. Jesse Cole, the CEO of Savannah Bananas, did a greeting video.

23:54And then we had some animation of the players and those sorts of things, just sort of a fun experience. And then the viewer landed in the Savannah Bananas zone, so the banana ball zone on the Roku platform. So we're using the strength of the platform and all of the fun features of the platform to integrate our partnerships and to elevate those partnerships and to create differentiation so that when people think about sports and streaming, they not only think about ease of use, they think about a differentiated and fun experience. And from a platform perspective, that's good for us because it encourages people to think about Roku as a platform that is must have for them because of not only the content that we have available, but how we present that content and the experiences we build around.

24:42Well, Joe, it's been great hearing a little bit more about the Roku sports strategy. That is all we've got time for today. So thank you so much for joining us. Yeah, appreciate it. Thank you very much for having me. I appreciate it.

25:04Hello, everyone, and welcome back to another edition of Streamtime Sports. I'm your host, Nick Meacham, CEO at SportsPro. Now, this episode is about a business that was recently valued at a way for$22 billion and their approach to sports. No matter who you are in sports and sports media, you've no doubt not only heard about this news, but are probably sitting there wondering what the future holds for sports on this platform. Yes, of course, I'm talking about Roku, who has recently agreed to being acquired by Fox for quite the number. Up until this point, Roku has been flying under many's radar when it comes to what they're doing in sports, but have a host of interesting partnerships across the sports ecosystem.

25:44So I'm thrilled to be joined by Joe Franzetta, who's the head of sports for Roku Media, to dig into more about their strategy for sports across the Roku channel and the broader Roku platform. Welcome to the show, Joe. Yeah, thank you, Nick. Appreciate it. Thank you for having me. So let's kick things off a little bit. We're still setting a bit of the scene as to really some of the stats and status of Roku as a business today, particularly as it relates to the sports strategy. So at a very high level, Roku is both a platform and a service. So we have the Roku platform. We have the Roku channel service.

26:19From a sports perspective, we look at ways that we can bring those two things together that is most advantageous to consumers, to viewers, to our distribution partners, to leagues, to brands and sponsors who want to reach them. Just to set context, as you said, Roku is a very large, largest connected television platform in North America, U.S., Canada, rapidly growing internationally. We have 100 million households. We are in roughly half of all broadband homes in the U.S. So the scale is and the reach is formidable. Excuse me. We have, you know, I always like to say that virtually all sports are on Roku somewhere.

27:02And as I'm sure you and viewers are aware, with the transition from the traditional linear television ecosystem into a streaming ecosystem, there are a lot of benefits, but there's also some challenges and some friction in terms of rights fragmentation, rights disaggregation, and creating an environment that allows viewers to seamlessly, easily get to the content that they want to get. get to, whether it's the live games or shoulder content or ancillary content. Our objective is to make that journey as simple as possible for viewers. And we've created a destination and a set of destinations really on our platform to address that, the umbrella being called the sport zone.

27:52And I can get into the details of that. And then we also integrate a lot of first party relationships that we have through the Roku channel into that same ecosystem with the objective of making an aggregated sort of one-stop shop for a sports viewer to find the content that they want to find and to have as much of a personalized experience around that as possible. So how would you describe that difference between what is served in obviously your core market in the U.S. versus outside of the U.S. market? Just give us a bit of a more of a nuts and bolts sort of description on what that looks like?