Roku And Google Declare A Truce, Fubo Buys Molotov

1. Roku And Google Declare A Truce

Roku and Google have been beefing about what Google allegedly wants Roku to do and what Roku allegedly wants Google to not do. Publicly, the battle was mostly around data capture and search rankings, both of which must seem trivial to consumers, 

Things had come to a head when a recent Roku OS update left YouTube TV virtually unworkable on most Roku devices and TV sets, forcing Google to come up with a workaround, since Roku had already banned YouTube apps from its app store, updated or otherwise.

There was also name calling, always fun to see, with Roku calling Google “an unchecked monopolist.” (Well, at least that’s what they called them publicly.)

When things really seemed to be coming to a head, Roku sent a letter of explanation to its 55 million plus subscribers, that began with “While we are deeply disappointed in Google’s decision to use their monopoly power to try and force terms that will directly harm streamers“, and went on to claim that Google was insisting on “unfair and anticompetitive requirements to manipulate your search results...”

And that was before the part about how “Google is under investigation by the U.S. Department of Justice and more than 30 state attorneys general for violating competition laws.”

To which Google merely shrugged.

But this week the two parties seem to have come to an agreement, at least for now, and Roku will once again support and carry the latest versions of the YouTube and YouTube TV apps.

Why It Matters

Carriage fee wars haven’t gone away, they’ve merely shape-shifted to fit the new streaming era. 

This one, between Roku and Google, seemed to encapsulate three of the bigger battlegrounds of the streaming era however: data, technology and Total World Domination.

Let’s start with data.

Google collects a lot of it and then uses it to fuel its massive advertising engine. According to Roku, Google was demanding that Roku juice search rankings on its interface in a way that gave YouTube an unfair advantage. 

There was also a claim that Google was demanding “search, voice, and data features that they do not insist on from other streaming platforms,” which seemed to indicate that Google wanted way more data about YouTUbe and and YouTube TV than Roku was willing to give up. 

This is not really all that surprising in that between its smart TVs and dongles, Roku is the largest streaming platform in the U.S. whereas Google is still struggling to get its Android TVs (renamed Google TV, but whatever) going in the U.S.

That alone must be incredibly frustrating to Google as they already have a good sized chunk of the European market, where, unlike the U.S., Android is not seen as the uncool brand your Mom made you buy.

Roku is rolling out in Europe now and while techies hate their interface with the heat of a thousand suns (more on that shortly), users seem to really like the simple iPhone-like interface and that’s got to be worrying Google and their plans for Total World Domination.

Then there’s the tech angle.

Roku’s operating system is not built on Android or any other standardized platform and that tends to drive engineers bonkers. They claim it’s hard to program for, which was why, in the early days of streaming, Roku updates were almost always rolled out last. 

Fast forward to December 2021, and Google has been pushing something called the AV1 codec, a technology that ensures 4K programming can be delivered using less bandwidth. (Netflix is a big AV1 proponent too.)

You know who’s not a big AV1 proponent?

Roku.

That’s because adding in said codec would likely make their TV sets and dongles more expensive and price has been one of their key selling propositions. It’s how they got people to buy all those Chinese-made Hisense and TLC sets with the Roku OS inside of them.

So they’re pushing back on that and it will be interesting to see how it plays out.

It all boils down to whether viewers see 4K as a must-have or nice-to-have feature and our suspicion is that it’s sort of like the way people view sound bars and surround sound systems--for some people it’s a must-have, for others it’s a needless waste of money and most are indifferent. 

That said, given the fact that the newly approved infrastructure bill will expand and improve broadband and broadband access throughout the U.S. (we hope), AV1 might not be all that big of a deal after all.

At least in the long term.

What You Need To Do About It

If you’re Roku, you still want to keep an eye on Google as they are going to continue to try and flex their muscles any chance they can get, especially as more and more people keep watching YouTube on their TVs. You’ll also want to make sure those licensing deals are rock solid because Amazon and Google both have the funds to steal them away from you, just because.

If you’re Google, remember that Congress is watching, that members of Congress are likely Roku customers and that the days of just doing whatever you want because you can and because no one in Congress understood what exactly you were doing are long behind you. 

There’s an easy solution to your Roku problem too: buy them. Because someone else is going to, and if that someone is Amazon, Apple or even Microsoft, that’s an even bigger problem.

If you’re a consumer, not much for you to do here. As noted, more of you are watching YouTube on your actual TV sets than ever before so there’s some concern over keeping access, but worst comes to worst, you can always try and figure out AirPlay.

2. Fubo Buys Molotov

FuboTV, who we’ve previously dubbed “The Little vMVPD Who Could” for its ability to survive and thrive in a market full of well-funded giants, made another interesting purchase this week, buying France’s Molotov TV.

Molotov is a popular service that combines free, ad-supported and subscription services via a very well-designed and easy to use app. The service has 17 million subscribers in France and the French-speaking regions of Africa.

The plan, as per the press release, is to provide Molotov with sports content while using its well regarded freemium business model to help drive growth internationally.

Why It Matters

Both Fubo and Molotov have something unique in common, which is that they’ve been focused on the actual technological capabilities of digitally delivered TV. While many of their competitors have stuck with user experiences that largely mimic traditional pay TV, both companies have looked to experiment. 

Fubo, for instance, has been toying with introducing sports betting into their platform, launching Fubo Sportsbook last month, a mobile companion app that allows for gambing. 

That, and they recently bought Edisn.ai, an AI video recognition company that they are hoping to use to improve discovery and recommendation.

Molotov, spurred by founder JeanDavid Blanc, has made interface a priority and prides itself on how it’s created a very unique user experience with excellent recommendation capabilities. It’s currently the second-largest streaming application in France, which is the second-largest European market with over 60 million households.

Together, they will hopefully be able to take TV in a better direction, spurring innovation around things like interactivity and discovery that have traditionally been put on the back burner.

The caveat here is that lack of interest on the part of providers is only one half of the reason that innovation has been lacking. The other is that consumers haven’t exactly been jonesing for it. 

That will hopefully be changing though as viewers get more comfortable with streaming, as the remotes and other devices used to control TVs get slimmer and more steaming-focused. (That was one of the more interesting findings of our recent report on The Emerging Smart TV Ecosystem: number buttons have largely disappeared from smart TV remotes, leaving them looking more like the sleek remotes from Apple and Roku.)

Regardless, it will be great to see some innovation in interface as well as (possibly) business model.

Molotov’s “freemium” business model has always seemed like a no-brainer to me and I am surprised that the various Flixes have not tried to adopt it.

Basically, Molotov offers a package of 36 channels for free, along with various upgrade levels and a premium movie package, While viewers can find plenty to watch for free, the existence of all those more premium channels provides a temptation along with the ability to upsell.

So in U.S. terms, why not have Pluto with the ability to upgrade to various flavors of Paramount+ and Showtime?

I still think this will wind up being the dominant business model for many American Flixes, and the headstart the Fubo-Molotov combination has in that regard is definitely a plus.

What You Need To Do About It

If you’re Fubo and Molotov, keep on keeping on. There’s plenty in the sports space that’s not the NFL and younger audiences seem interested in it, plus anyone who is seeking out your sports programming is going to be a far more passionate fan.

Keep working the interface too, and making your app more interactive and intuitive with help from acquisitions like Edisn.

If you’re one of the other vMVPDs or one of the Flixes, take a look at Molotov’s model, as I suspect that starting people off at free is a great way to get them to upgrade to paid, without all that messy churn. 

And given the state of things, it’s certainly worth a shot.