Roku Chose Distribution Over Experience. Fox Paid $22 Billion for It.

We’ve heard plenty of hot takes on Fox’s planned $22 billion acquisition of Roku, and here’s mine: Roku was never trying to build the best CTV experience.

Instead, Roku intentionally prioritized distribution over experience, and that decision may be exactly why Fox was willing to pay $22 billion for the company.

Roku Chose Distribution Over Experience

Roku was incubated inside Netflix before being spun out as an independent company in 2008 to bring Netflix into people’s homes. It launched at $99, one-third the price of Apple’s $299 Apple TV, which at the time was still focused primarily on syncing and playing iTunes content rather than streaming Netflix (which didn’t come to the Apple TV until 2010).

By 2011, Roku leaned heavily into a “Roku in every home” strategy by launching an even cheaper device, the Roku LT (Roku’s CEO, Anthony Wood, literally used that phrase when announcing the device). The company then pressed the gas on this strategy when it signed its first deal to integrate its Roku OS into another manufacturer’s TV with TCL in 2014.

Roku now needed to develop and maintain an operating system capable of running on underpowered devices and TVs. It continued its “Roku in every home” strategy by adding more partnerships with manufacturers and maintaining its budget options (you can pick up a Roku Streaming Stick today for $29).

Supporting a wide range of low-cost hardware inevitably creates tradeoffs. Budget streaming devices age poorly, TV manufacturers often underpower their sets, and maintaining compatibility across such a broad ecosystem can lead to a sluggish experience for users.

But Roku’s strategy depends on saturating the market with its software, and low-cost devices and TV manufacturer partnerships are the vehicles that make that possible.

Roku’s business model often includes inventory-sharing arrangements with publishers. That gives Roku a strong incentive to maximize distribution and expand its footprint wherever possible.

It benefits Roku to drive the price down as far as possible and get the Roku OS into as many TVs as it can to build a larger footprint for ad and platform sales. The result is a massive install base, but that scale comes with the risk of a poor experience for some users on budget devices and TVs that may hang on a wall for a decade or more.

But Roku doesn’t care about CTV experience snobs like me. It cares about making an operating system Grandma can use and getting into as many homes as possible. It succeeded and now powers TVs in over 100 million households.

The fact of the matter is that Roku offers a good enough experience for most people.

Fox clearly doesn’t care, and why should it? Roku’s success was never primarily about building the best user experience. It was about building the best distribution, platform, and advertising strategy.

Why Fox Wants Roku

Fox is buying Roku because it occupies a meaningful position in how television is discovered, distributed, measured, and monetized.

The acquisition comes as media companies seek to offset the gradual decline in traditional distribution. Historically, owning premium content was often enough. Today, many of the companies capturing the most value, including Google, Meta, Apple, and Amazon, own the layers that sit between consumers and content.

Because Roku sits between consumers and many of the streaming services they use every day, it has access to a unique set of signals related to device usage, application launches, household activity, advertising exposure within Roku-controlled environments, and broader viewing behavior.

It’s also a much richer dataset than most streamers’. Roku maintains a persistent user relationship tied to an account and email address at the device level, and Roku has visibility into a significant portion of viewing behavior across many apps on its platform.

For Roku TVs where users have opted into ACR, Roku can collect viewing data across inputs, including linear TV, gaming consoles, and external streaming devices.

All of this allows Roku to build a large-scale household graph from a combination of device, viewing, and advertising signals. In a world where advertisers increasingly care about identity, reach, frequency, attribution, and measurement, those assets are incredibly valuable.

Historically, Fox’s strength was content. It owns premium sports rights, news programming, local stations, and Tubi. What it lacked was a meaningful position within the identity and measurement infrastructure that increasingly powers modern advertising.

While identity tends to drive conversations about targeting capabilities, measurement may ultimately be the greater opportunity.

Most advertisers can already find sports fans, news viewers, auto intenders, or streaming audiences through other providers. The harder challenge is understanding who was reached, how often, and whether those exposures actually drove business outcomes.

Because Roku operates at the platform layer, it can observe a broad set of viewing and advertising signals across the TV ecosystem. Combined with Fox’s existing assets, that creates opportunities to build measurement products spanning Fox Sports, Fox News, Tubi, Roku Channel, and Roku’s network inventory.

That may not sound as exciting as targeting, but measurement is one of the most strategically important areas in advertising.

A Platform or a Media Company?

So all this sounds great, but did Fox get a good deal?

From a purely financial perspective, the acquisition may require some squinting to justify. Fox is paying roughly $22 billion in enterprise value for a company that generated less than $5 billion in annual revenue and only recently returned to profitability after a three-year drought.

Fox is paying approximately four times Roku’s expected 2026 revenue. Whether that’s expensive depends largely on how you classify Roku.

If Roku is a media company, the multiple looks rich. Traditional media acquisitions such as Sky and 21st Century Fox were acquired at revenue multiples around 2-3x, materially lower than those for many platform and software transactions.

If Roku is a platform business controlling access to more than 100 million streaming households, the valuation starts to look much more reasonable. But should Roku be evaluated as a media company at all?

Fox isn’t buying Roku because it needs more content. It already owns premium sports rights, news programming, local stations, and Tubi. Roku’s value lies in its position in the ecosystem, not in its content library.

The acquisition is about controlling a platform that sits between viewers, publishers, and advertisers. That position gives Fox distribution, data, measurement capabilities, and potentially a powerful channel for promoting its own content.

Viewed that way, the transaction starts to resemble acquisitions where strategic position mattered more than current earnings. Companies that control critical layers of distribution, identity, measurement, or consumer relationships often command valuations that appear expensive relative to traditional media businesses.

At roughly 4x revenue, Roku sits in an uncomfortable middle ground. It looks expensive if it’s a media company, but potentially reasonable if it’s a scaled platform asset sitting at the intersection of distribution, identity, measurement, and advertising.

The Neutrality Problem

The strongest argument in favor of the deal is that Fox may have acquired one of the few scaled independent platforms left in connected TV.

Compare this to The Trade Desk’s attempts to launch a nascent independent TV operating system with Ventura. TTD faces an extraordinarily difficult challenge in building Ventura into a scaled operating system from scratch.

In hindsight, it’s fair to wonder whether acquiring Roku in 2024, when Roku’s market cap hovered around $11 billion and TTD’s exceeded $69 billion, would have been the easier path.

What’s particularly striking is the scale of the bet. For TTD, Roku would have represented a relatively modest acquisition. For Fox, the company is paying more for Roku ($22B) than Fox is worth today (~$19B).

But TTD could have gotten cold feet if it ever thought about a Roku acquisition, fearing it would expose its neutral market position. TTD would suddenly become both a platform provider to and competitor of many of the streamers whose inventory powers their DSP.

Ventura explicitly says it will not own inventory, and this is a key part of Roku's enterprise value. But from a strategic standpoint, could all the identity + measurement capabilities and the household footprint alone be worth ~$11 billion to TTD in retrospect?

We may never know, but we do know that Fox may now have to maintain the perception of neutrality to preserve Roku’s current business.

Many streaming publishers accepted Roku's inventory-sharing arrangement due to the platform’s massive distribution footprint. This was also done knowing that Roku is pushing into the content business with The Roku Channel, so it wasn’t seen as a completely neutral platform.

That perception becomes even more complicated under Fox ownership, because Disney, Paramount, Warner Bros. Discovery, and others all compete directly with Fox for advertising dollars, audience attention, and streaming engagement. Those companies may reasonably ask whether they are now providing inventory, data, and economics to a more direct traditional competitor.

So Fox must walk a new tightrope to maintain Roku’s current business and continue to grow.

It’s not like publishers can just pull out of a platform with the largest streaming footprint without suffering. Roku maintains a highly advantaged position as long as it can preserve its market share and distribution footprint.

But a new Apple TV device is supposedly coming this fall, and Amazon Fire TV, as well as major TV manufacturers like LG and Samsung, continue to eat into market share. Roku will need to fend off competition in the highly fragmented CTV device OS market from all sides.

In any case, this is a massive bet by Lachlan Murdoch and Fox.

The acquisition only works if Roku remains a dominant platform sitting between viewers, publishers, and advertisers. If Fox can preserve that position while expanding its measurement, identity, and advertising capabilities, the deal could look prescient. If not, Fox may discover that platform assets are much easier to buy than to maintain.

And that’s a wrap.

The Marketecture team is back stateside, with our sanity and luggage (mostly) intact. After enduring a record-breaking heatwave, we’re embracing the luxury of air conditioning while keeping the content captured at Cannes just as hot.

Because advertising’s grande fête is really just the starting line for where the industry is headed next, we’ll be releasing footage captured on and off the Croisette throughout the summer.

Expect candid, thoughtful conversations designed to inspire and inform how you’re thinking about, planning for, and investing across CTV, AI, Commerce Media, Creators, and more as advertising continues to evolve into its future form.

From the French Riviera to your social feeds, we’re bringing you Cannes coverage that goes well beyond the Croisette – and the headlines.

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