Why is Roku winning while streamers are struggling? Take a look at Roku City

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Presumably, when you flick through Roku, the streaming hub that claims over 70 million active accounts, it’s because you want to watch a show, movie, or event. But it’s increasingly clear that many people are spending at least some time watching. . . The Roku screen saver. The dark cityscape with Roku-purple and magenta highlights scrolling on a relaxing endless loop has been named Roku City on social networks and in various memes. “This particular screensaver took on a life of its own,” said the New York Times said last year, calling idle Rokus “an unlikely place for a massive public art experience.”

Now, Roku itself has taken a closer look at its digital metropolis and has gradually started adding something new: advertising.

It is a nascent initiative. But as other streamers cut costs and try to minimize subscriber churn, it’s also a signal that Roku is finding adventurous ways to grow. Today, the company reported strong quarterly revenue growth ($847 million, up 11% from last year) and beat expectations for second quarter earnings; its official shareholder letter specifically called out the fact that its “iconic screensaver” is now “open to major brand advertisers”, and Roku City’s ads were hailed in its earnings call as having strong potential .

A few weeks ago, Grimace appeared in Roku City, bringing McDonald’s Purple-Shake-and-Happy Meal campaign — and the Golden Arches — to its imaginary main street for a while, in what Roku said was the first brand advertising contract on the screensaver. More recently, the Barbie The film’s overwhelming marketing campaign included Roku, and part of its presence on the service included the temporary addition of “Barbie’s extravagant three-story dream house” to Roku City, “equipped with a dance floor , a hot pink slide, and an expansive shoe closet,” according to a company blog post. There was also a Barbie-branded Roku theater and billboards pointing to the movie’s trailer. More recently, a Walmart dealership and an Acura dealership have arisen. (Roku Suburb?) The company said there was more to come (and in its earnings call suggested that demand is greater than capacity).

The urban landscape, which debuted in 2018, was created by Kyle Jones, then a freelance graphic designer. Jones has blurred the digital urban environment with dozens of cinematic references, from King Kong For Insomnia in Seattle, with an aesthetic that balances art deco and noir. The foreground is a bustling strip of theaters, cafes and apartment buildings; in the background, across a river, the scene is surprisingly menace-filled, with a volcano, a menagerie of rampaging monsters, and other mayhem. The eerie contrast is part of what makes Roku City worth watching – or at least spacing out while you wait for your partner to finish making tea and pick up a real show. “How would that be,” Gawker Writer Olivia Craighead wondered, “to live in such a place, where there is peace in a borough while a river away there is mass hysteria and a giant robot terrorizing the masses.”

In fact, low-key advertising was part of the fabric of Roku City (originally called by the company “City Scroll: Movie Magic”) from the start, with virtual billboards for the Roku app and the latest shows on its own. Roku channel. But as Roku continued to tinker and expand its business model, adding more original programming to its channel, including the movie Weird Al; cut a deal with Shopify to allow viewers to purchase certain products through their TV remotes – he obviously concluded that Roku City is valuable real estate. After all, 85% of Roku users “have sat and watched Roku City go by,” according to the company, “and two-thirds say they’d love to visit if given the chance.”

In the run-up to this year’s Newfronts/upfronts marketing scrimmage (where platforms court potential advertisers), Roku has been promoting its imaginary city on actual display screens in Times Square. In May, the Paramount+ streamer got its own temporary Roku City “neighborhood” in a kind of brand takeover that reinvented the digital cityscape with Paramount-centric iconography, from its logo to winks. visuals to Top Gun: Maverick And star trek, among others; billboards led directly to Paramount content. McDonald’s and Barbie campaigns, more integrated with the Roku Cityscape standard, followed. This variety underscores Roku’s unusual position as both a gateway to content and a place for advertising.

Roku is currently losing money, but has exceeded expectations in recent quarters. Going into its earnings announcement today, its share price had jumped more than 75% this year and rose sharply in after-hours trading following the release of its results after today’s close. today. It’s still a long way off its 2021 highs, reflecting broader pressure on the streaming category in general to prove profitable business models. But its latest revenue figures suggest it remains a popular streaming hub for tens of millions of users – active accounts grew by nearly 2 million in the last quarter, reaching 73.5 million. And tapping into curious curiosity is consistent with its efforts to position itself somewhat above the so-called streaming wars.

At this time, it’s unclear how much money the Roku City ads could make: the company declined to comment, citing the quiet period before its earnings announcement; and in all honesty, the effort is only a few weeks old. But the digital metropolis clearly has a role to play in Roku’s ideal advertising future. This makes brand campaigns “must have,” as one Roku executive said when pitching Newfront to marketers this year. “A lot of people are renting ad space from you,” another executive added, “but Roku is building a world that’s entirely ad-friendly.” Its screensaver city aims to be on this map.

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