Streaming World Consolidates As Frndly TV Is Sold To Roku For $185 Million
The streaming world got a little more consolidated and a little bit less friendly.
Frndly TV, founded in 2019 as a low-price family-friendly virtual multichannel video programming distributor (or vMVPD as they say in the business) agreed to be acquired by Roku for $185 million in cash, the companies announced Thursday.
Consolidation seems inevitable in the streaming industry, particularly among those with subscription models. The pressure might be most severe in the vMVPD sector, where Fubo TV agreed to be acquired by the Walt Disney Co., which already runs Hulu Plus Live TV, the closest competitor to market leader YouTube TV.
The vMVPD business has been a difficult, low-margin proposition, with networks charging the lowest rates to the big cable companies (MVPDs) and higher rates to digital upstarts. Even with low rates, some cable companies have said they’re not making money selling video and have dropped out of the TV business.
Though its red ink has been shrinking, Fubo reported a net loss of $115 million for 2024. Yet Frndly always maintained that it was a profitable business.
In a streaming industry where price increases have become as inevitable as death and taxes. Frndly TV hiked its rates only twice, despite regularly adding channels and features. Frndly TV raised its base price from its starting point $5.99 a month to $6.99 a month in 2022 and ahnounced in April another $1 hike that would take effect May 15.
The company stopped disclosing how many subscribers it had a few years back when it had more than 700,000.
Because Frndly is still small, the Roku transaction might not get hung up by regulators. The Disney-Fubo deal, which happened in part to resolve a Fubo lawsuit that prevented the launch of the doomed Disney-Fox-Warner Bros. Discovery sports streamer Venu, has come under criticism on antitrust grounds from Senator Elizabeth Warren of Massachusetts. (President Trump’s nominee for head of the Justice Department’s Antitrust Division, Gail Slater, was previously deputy general counsel for Roku.)
On Roku’s fourth-quarter earnings call Thursday, Roku CEO Anthony Wood was asked why invest in Frndly when most of the vMVPD business seems to be circling the drain.
“I don’t think of them as a virtual MVPD. I think of them as linear channels that’s in a paid tier that we can grow. And linear channels are very popular in streaming as well. And they’re very popular on our platform as well,” Wood said.
“I agree that if you look at sort of cable subscriptions and their replication as virtual MVPDs that, it's easy to think that and it's easy to believe that that's going to not last as a bundle or as a market forever,” Wood said. “But linear is a form of entertainment engagement that is very popular. And it's actually growing in popularity. On our platform, linear channels, sometimes people call them FAST channels, these are streaming linear channels. They're very popular and a huge form of engagement. There's a lot of people that like to just flip through the channels.”
He added that Frndly has been growing well. “We brought in it as a growth company and we do think that we can grow it faster. It also will be adjusted EBITDA margin accretive in its first full year for us.”
Charlie Collier, president of Roku Media, said that “there are brands inside Frndly that will be elevated simply by being focused on by Roku. And that's exciting for us as programmers and it allows us to do what we're here to do, which is root for all the television and provide a better lead in for it. So this is a good home for that bundle of services.”
As part of Roku, Frndly’s ad business will benefit from Roku’s recommendation engine and sales team, Collier added.
Frndly TV’s team, including its executives, will stay on after the transaction closes, the companies said. The acquisition is expected to be completed in the second quarter and $75 million of the purchase price is being held back and tied to meeting performance goals and milestones over the next two years.
In addition to the Roku ecosystem, Frndly TV will continue to be available on all platforms and devices where it’s available today, including Amazon Fire TV, Android TV, Google TV, Apple TV, Samsung, Vizio, the web (and via Chromecast), and mobile (Android, iOS).
On the Roku call, executives were asked the usual questions about the economy and tarrifics and downplayed the impact uncertainty had on their financial outlook.
“Obviously, there’s a lot of macro uncertainty, but there’s a lot of Roku specific positives, that give the confidence to reaffirm our guidance for the full year,” Wood said.
“Advertisers have already been shifting their budgets from linear to streaming and from direct insertion orders to programmatic,” Wood added. “Those are two big trends that are positive for Roku, and we’re seeing that continue. Macro uncertainty causes advertisers to look for more performance. They start looking for higher ROI, more performing ads, and more flexibility, and Roku is good at all those things.”
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If the media business is so bad, how come everyone want to be in it? Especially those in the retail business.
Chuck E. Cheese announced the launch of its CEC Media Network, which will have 3,000 digital out-of-home screens in 500 venues reaching all 210 TV markets.
The network will feature family-friendly content and dynamic ad inventory via Panasonic’s ClearConnect content management software. The inventory will be available via direct sale and programmatically.
Chuck E. Cheese said it is also working with Future Today to launch a branded streaming network aimed at kids aged 3 to 8. Collaborating with Future Today will put Chuck E. Cheese content alongside the CoComelon, Blipp and Ryan and Friend Channels on platforms like Happy KIds.
Chuck E. Cheese said it invested $350 million to build a media ecosystem that connects with families and gives brands contextual access to kids and parents.
“Chuck E. Cheese is more than just an entertainment destination—we’re becoming one of the most powerful family media platforms in the country,” said Melissa McLeanas, VP of global media, licensing and entertainment for Chuck E. Cheese.
“This collaboration exemplifies how trusted family brands can reach audiences in a fragmented digital media landscape while maintaining the highest standards of quality and safety that parents expect,” added Vikrant Mathur, co-founder of Future Today.