Roku, Lacking YouTube Channel, Targets Google Site’s Content Partners

Internet set-top maker aims to lure YouTube multichannel networks with more favorable 30-70 ad split

Roku still doesn’t have a deal to offer YouTube content directly — and now the Internet set-top maker is stepping up efforts to ink distribution pacts with the site’s multichannel networks, promising them a more favorable ad-revenue split.

Execs from Roku attended last week’s VidCon, the online-video convention held Aug. 1-3 in Anaheim, Calif., sponsored by YouTube. Roku’s explicit goal: to cut deals with more YouTube partners who are dissatisfied with the Google video site’s 45% cut of ad revenue, an arrangement that has led many YouTubers to increasingly diversify distribution to other platforms.

Roku, by contrast, offers deals under which it takes only 30% of advertising or subscription revenue, according to Ziba Kaboli, Roku’s director of content acquisition.

“In the past few months, we’ve had overwhelming demand from YouTube content creators and multichannel networks,” Kaboli said.

Roku already has agreements several big YouTube MCNs on its box, including Vevo, Alloy Digital, IGN, CollegeHumor and Machinima, whose properties are among the top 100 most-viewed YT channels. Other pacts with YouTube content creators are in the works, Kaboli said.

SEE ALSO: YouTube Content Partners Want to Reduce Their Reliance on the Video Site

Meanwhile, Roku and YouTube have been discussing a pact for at least three years. Roku, which has sold more than 5 million boxes, previously provided a YouTube channel but was forced to remove it in 2010, according to a notice on the Roku website.

What are the sticking points? Roku says the companies have been unable to agree on “business terms,” while YouTube says the set-top does not yet fully support required features like playlists.

Roku, in its pitch to YouTube MCNs, argues that it’s a better broadband TV option for content providers looking to control their own destiny.

Besides the more generous revenue split, Roku touts the ability of YouTube content creators to have their own channel featured in Roku’s listings. “Every single YouTube partner and MCN wants direct access to the audience,” Kaboli said. “They get a ton of views on YouTube but they really want to build their brand.” Users may have seen CollegeHumor clips on YouTube, for example, “but on Roku they have a brand presence,” she said.

Separately, Google has its own path to the TV with Chromecast, a $35 adapter YouTube and Netflix video. That lets YouTube monetize ads displayed on TV directly.

But Google clearly doesn’t have a philosophical problem making YouTube content available on third-party consumer electronics. YouTube is available on a host of connected-TV devices — including Apple TV, TiVo DVRs, gaming consoles like Microsoft Xbox 360 and Sony PlayStation3, and TVs and Blu-ray players from Sony, Samsung, LG, Toshiba, Panasonic, Vizio and others.

Roku says it continues to talk to Google about adding a YouTube channel, which could coexist with the dedicated channels run by YouTube content partners.

To date, Roku has raised about $140 million in funding from 21st Century Fox, BSkyB, Hearst, venture-capital investors Menlo Ventures and Globespan Capital Partners, and an unnamed strategic investor believed to be Dish Network. The company was founded by CEO Anthony Wood in 2002, and relaunched in 2008 with an over-the-top video device based on a project Wood had been leading at Netflix.