Roku Has Entered The Chat: Howdy Goes Mobile

Two weeks ago, Roku gifted free Howdy subscriptions to 15,000 Texas A&M freshmen through a campus partnership announced at SXSW. One week before that, a distribution deal placed Howdy inside Amazon Prime Video. Both moves expanded the service's reach. Neither gave subscribers a way to watch on their phones. That changed Tuesday.

For a service courting a generation that watches vertically, in clips, on screens that fit in a pocket, the SXSW giveaway was a structural mismatch between the acquisition strategy and the product. The mobile app closes it while simultaneously accelerating the growth lever for Howdy.

"At a time when most things are getting more expensive, Howdy is designed to make premium, ad-free streaming more affordable and accessible for all viewers," said Gil Fuchsberg, Roku's president of subscriptions, partnerships and corporate development.

"Launching the Howdy mobile app on iOS and Android enables us to continue growing the service beyond the Roku platform, bringing Howdy's unique value and quality entertainment to even more viewers."

The Acquisition Channel Problem

Lucas Bertrand, CEO of Looper Insights and guest on the State of Streaming podcast, put the dynamic plainly.

"Prime Video Subscriptions is the biggest acquisition channel for most of the apps," Bertrand said. "You need real massive horsepower to be a pure DTC like a Netflix or a Disney. Everyone else has got to go where the audience is."

That podcast comes out later today so be sure to subscribe above☝️ or below 👇 to be notified when it does.

Now, every subscriber who discovers Howdy through Prime Video and later downloads the native app is a billing relationship Roku can reclaim. At $2.99 per month with Amazon typically taking 15 to 30%, the margin math on a Prime Video subscriber is thin. A direct mobile subscriber at the same price keeps the full $2.99 essentially becoming an inverted funnel.

Volume through Amazon. Margin through mobile. Both feeding the same platform revenue line that grew 18% to more than $1.2 billion last quarter while hardware revenue grew another 3%.

Three Properties, One Stack

Howdy now sits alongside The Roku Channel, which Roku says is the most-watched free ad-supported streaming television (FAST) service in the U.S. something we observed as well in our Q1 Unified Streaming Power Index (USPI). Combined with Frndly TV, a live TV subscription service, the three properties give Roku a first-party content stack spanning FAST, live TV and ad-free subscription video on demand (SVOD), all running on the same platform infrastructure.

The app offers access to more than 10,000 hours of content from FilmRise, Lionsgate, Sony Pictures and Warner Bros. Discovery, along with select Roku originals. April additions include "Edge of Tomorrow," "Tyler Perry's Madea's Big Happy Family" and "When Harry Met Sally."

Those 15,000 Texas A&M freshmen arrive on campus in August. Howdy now works on the device in their hands. Whether Roku builds a mobile-native discovery layer to match, with short-form clips, a vertical feed, or native sharing, will determine if the app is a viewing destination or just a checkbox.

The gap is closed. The question is what Roku builds on top of it.