The acquisition of a streaming platform is not, in itself, news anymore. What is news is when the buyer admits, however quietly, that it has been operating with one arm tied behind its back.
In agreeing to pay $22 billion for Roku, the connected-TV company whose devices sit in more than 100 million households worldwide, Fox has acknowledged something that analysts have been saying for some time: that owning the rights to televise the Super Bowl is not quite enough when the advertiser sitting across the table wants to know who, exactly, is watching.
"Roku is a need-to-have because Fox's digital revenue is not that big," said Ross Benes, a senior analyst at Emarketer. "Overnight their digital revenues, or at least their digital video revenues, are going to explode once this goes through — probably double, maybe triple."
The arithmetic is instructive. Fox's total advertising revenue in the first quarter reached $1.56 billion; Roku's was $612.7 million. But when one narrows the lens to programmatic advertising — the automated buying that has become the preferred method for much of the industry — the picture inverts. "Roku's programmatic business, from just a pure dollar perspective, is about twice the size of Fox's," said Sean Wright, chief insights and analytics officer at Guideline, the ad intelligence firm.
Fox has, of course, been building its own advertising technology, having acquired the AdRise platform along with Tubi, the free streaming service, and having unveiled the OneFOX ad platform a year ago. But the company has been missing what Disney and NBCUniversal have made the centerpiece of their sales pitches: a robust first-party data set built on logged-in viewers.
Tubi, for all its nearly 100 million monthly users, does not require a login. (What, you were expecting a free service to be demanding?) Fox One, the company's flagship app, reaches only 4 percent of American adults monthly, according to Forrester.
Roku brings the opposite condition: a platform that knows, with some precision, what is being watched on the television sets into which its devices are plugged, thanks to automatic content recognition technology. "Fox is going to internally have viewing behavior data at a level they've never had," Mr. Benes said.
Now comes the integration, which the companies have suggested will involve keeping Tubi and the Roku Channel separate — a plan that strikes industry observers as temporary at best. "Every merger and acquisition I've lived through in my life is always like, 'We're not going to touch any business,'" Mr. Wright said. "And then obviously, the deal closes, and then all of a sudden lots of change happens."
The regulatory process continues. The questions about technology stacks and audience graphs remain. But for a company that has spent decades selling commercials based on who might be watching, the appeal of knowing who actually is must be considerable.
Original story published in Digiday: "Future of TV Briefing: Fox finds its programmatic identify in Roku"