When you turn on the TV, how do you decide what to watch first? YouTube, Netflix and Disney+ are among the most popular individual video platforms. But the incremental response that dictates your TV choices may very well be YEAR, Amazon Fire and Apple TV. Why? Because these companies are controlling distribution, not just content programming. All three operating systems house the streaming services and applications we use every day. That’s what it does Fox’s acquisition of Roku so convincing. It’s a bet one level up from streaming wars. Instead of competing directly with Netflix, Disney+ and HBO Max, Lachlan Murdoch is moving to own the profitable entertainment distribution layer alongside Amazon and Apple.
Earlier in the broadcast wars, individual services fought for content. Everyone wanted the biggest shows that built the biggest subscriber bases. Netflix Foreign thingsHulu’s The Handmaid’s Taleand Amazon Prime Video’s boys— new originals that attracted new customers en masse. HBO’s comprehensive cultural grab Game of Thrones prompted rivals to throw tens of millions of dollars into splashy IP. Marvel, Star Wars, DC and Lord of the Rings.
These programming fights are still going on, but on a smaller scale. As the industry matures, the focus has shifted somewhat away from individual content lineups and toward controlling discovery, recommendations, and placement. This is where the real power and value lies. Roku, Amazon Fire TV, Apple TV, Walmart’s Vizio are all operating systems that host the world’s YouTube, Netflix and Disney+. Those watching Paramount+ Earth man or HBO Max Pitt likely to do so through one of these companies’ devices.
Imagine that TV operating systems are like properties in Monopoly, and the individual broadcasters and applications that consume our attention are the houses and hotels built on top of them. It’s easy to see where leverage has accumulated in that dynamic. (Investors remain more cautious as FOX shares fell 18 percent in the first hour after the deal was announced, and Roku shares fell 1 percent).
How Fox is getting up
The further we get out of the 2010s, the clearer it becomes that Fox was going from strength to strength. This Roku acquisition is the loudest proof yet.
On the micro side, it gives the company a firm foothold in the small but growing world of ad-supported free-to-air TV (FAST). According to Nielsen Meter. (However, one third of the overlap between the two audiences, or viewers using both, would reduce the combined total somewhat.) A quarter of Roku Channel viewing comes from tiling on the home screen, while the other 75 percent comes from search and discovery. The combination of all distribution of Fox, Roku and Tubi positions the company as the third largest distributor of connected TV in the US, according to Nielsen.
But Roku isn’t just another streaming service. At the macro level, it’s a front door to the entire stream. Transactional video-on-demand (one-time rental or purchase of titles) and third-party subscription markets (subscribing to broadcasters available on these apps) are profitable businesses. “Amazon Channels is, by all accounts, the largest distributor of streaming services with nearly 100 million subscriptions globally, from which they receive a commission,” Owl & Co founder Hernan Lopez wrote. Streamonomics Newsletter. Fox is clearly chasing a similar quarry.
Like me covered beforeFox sold its entertainment assets the hyper-focus on sports, news, the Tube and the growing creator economy. In what may or may not be a sign of a fragmented future, abandoning blockbusters for passionate niches has worked. The stock is up 33 percent over the past five years. But the model was heavily dependent on the rapid decline of linear TV. This move takes a unique angle on broadcasting that is more meaningful than Fox One and Fox Nation.
Is there now an argument to be made that Fox is the better-positioned legacy media company thanks to a narrow content focus and ownership of high-value platforms for consumers? Roku, Amazon, Apple and Vizio have figured out how to let programming from rival companies send money to their coffers.
Quietly winning the streaming wars
I before arguing Sony won the streaming wars by ditching him. Fox largely did too, saving itself billions in the process. The biggest differentiator right now? After taking control of Roku, Fox is poised to take some of its competitor’s subscription and ad revenue.
Roku usually takes about 20 percentage of any third party subscriptions selling or purchasing through the application carried out through its operating system and an advertising cut of approximately 30 percent. (Apple famously collects 15-30 percent from TVOD). So the company makes money every time, say, a Dove ad appears on Hulu or you subscribe to HBO Max through its system. With more than 100 million families in the world using Roku, few, if any, rivals can afford to abandon the service.
As we’ve seen across the industry in recent years, subscriber growth is harder to come by. This is partly because the broadcast audience is becoming more homogeneousaccording to data from Greenlight Analytics, where I work as Director of Insights & Content Strategy. As of 2024, exclusive streaming viewers who don’t use linear TV are older, more female, less diverse and less engaged. This makes content discovery more important than ever.
Hollywood has spent a decade trying to catch up and beat Netflix under the assumption that becoming the default destination is the only way to survive. Fox is betting that it might be more profitable to own the bridge that leads there.
