Roku Has Upended the Cable TV Power Dynamic
Comcast (NASDAQ:CMCS.A) is about 10 times as large as Roku (NASDAQ:ROKU) in terms of market cap. The telecommunications and media conglomerate has generated nearly 90 times more revenue than the smaller streaming TV company over the past year. Yet, despite those vast differences in fundamentals, Roku appears to have the upper hand as Comcast's NBCUniversal prepares to launch its Peacock streaming services in a matter of days.
That's a significant change in the underlying power dynamic, one that has been created by massive differences in each company's trajectory.
CNBC (owned by NBCUniversal) reported yesterday that NBCUniversal has been unable to finalize a distribution deal with Roku or Amazon.com for Peacock, which launches on July 15. The chances of the companies reaching an accord in less than a week is less than 10%, according to the outlet's sources.
At issue are user data and how ad inventory is shared. Amazon wants tight control over the customer relationships and underlying user data, while Roku wants to keep more ad inventory for itself. Roku's platform business is predominantly advertising and the company has long reserved the right to keep 30% of video ad inventory from ad-supported channels, in addition to 20% of revenue from subscriptions and a la carte transactions.
However, Roku doesn't always take 30% of ad inventory, particularly for smaller channels that don't have large audiences. Prominent channels with more viewers have more leverage in trying to negotiate a lower percentage, and NBCUniversal is reportedly ...
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