Media streaming technology expert Roku (ROKU -4.34%) is pulling out all the stops for its latest nugget of original content. The company promotes the living daylight of Bizarre: the story of Al Yankovicthen using the movie itself to publicize Roku’s own streaming channel.
I think that’s absolutely the right thing to do. This marketing punch looks like a watershed moment for Roku’s ad-supported streaming service.
What’s going on?
Weird is a tongue-in-cheek biopic about comic musician Weird Al Yankovic, starring Harry Potter star Daniel Radcliffe in the lead role. Westworld headliner Evan Rachel Wood plays Madonna, Weird Al’s love interest and nemesis.
This is an exciting project for Weird Al, recognized as a writer, producer and supervising music producer. This idea began as a short trailer for a 2013 fake biopic of Weird Al, produced by Will Ferrell’s comedy studio, Funny or Die. This video went slightly viral and Weird Al’s fan base wanted to see a full movie to match the trailer. A decade later, the creative minds behind the film considered taking this joke to the next level, and the project took a turn when Radcliffe agreed to star in it.
With a authentic movie star on the list, Roku agreed to invest in the feature film. With support from Roku, the team had a $12 million budget to work with. According to Yankovic, other studios were interested but only Roku “pulled out his checkbook” during the negotiations.
Originally slated to shoot in Georgia, to cut costs, production was moved to Los Angeles. This change allowed Weird Al to feature cameos by a long list of Hollywood luminaries – still playing another one luminary of entertainment rather than themselves.
Weird premiered at the Toronto Film Festival in September, where it won the People’s Choice Midnight Madness Award. Seems about right.
How is Roku promoting this movie?
On the face of it, the film received the usual support from a perfectly normal studio.
- Radcliffe, Yankovic, and Wood hit the late-night talk show circuit and other media.
- Roku held a raffle with an all-expenses-paid trip to premiere and a 65-inch Roku TV.
- T-Mobile (TMUS 0.45%) signed as main sponsor. Telecom’s involvement was partly inspired by a wide-open creative playbook and partly by Roku’s heavy marketing investments.
- Of course, Weird Al teased the next film over 100 stops from the ill-fated return of the ridiculously indulgent and ill-advised vanity tour. The series of mostly intimate venues began in April and ended with an extravaganza at New York’s Carnegie Hall the week before. Weirdis the first.
- As the proverbial icing on the cake, the film premiered on this iconic video billboard in Times Square on November 4, the day the streaming video version launched. It’s high-end ad real estate, which must have cost Roku a pretty penny.
That would be normal for a guaranteed blockbuster from one of the major movie studios, but we’re talking about a $12 million budget and a relative newcomer to the movie production business. Weird isn’t Roku’s first original production, but that company’s originals are almost always series rather than movies.
And Roku doesn’t exactly have the cash reserves. The company has $2 billion in cash equivalents on its latest balance sheet, but only after issuing $1.49 billion in new stock over the past three years. The company does not hesitate to ask investors for help to keep the lights on.
Getting the most out of a big investment
As a longtime Weird Al fan, I grabbed the Tampa episode from the recent tour and watched Weird with my first cup of coffee on Friday. The film earned a respectable 87% quality score from critics on Rotten Tomatoes and a positive 93% rating among Google users. Again, that seems fair. It’s a very enjoyable parody of the biopic genre, and the cast features enough big names to make your head spin. If you get people to watch it, they should enjoy it.
And when viewers come, they’ll face several unmissable commercial breaks. The usual collection of laundry detergent and car insurance commercials get minimal screen time, but each block of ads has two mandatory ads. The first 40-second spot is for main sponsor T-Mobile, which makes sense. The second extra-long ad roll is for the Roku channel itself.
You don’t see that very often, do you? Of course, TV and radio stations name their own services as often as possible in their content feeds, but it’s rare to see a full commercial touting the channel you’re actually watching. Additionally, the first commercial break begins with a brief appearance by Weird Al himself, making sure the viewer knows it’s the Roku channel. The company has looked into every opportunity to promote the underlying streaming service here.
So Weird seems like an effective tool to bring more viewers into the Roku Channel experience. The streaming platform is a big part of Roku’s advertising revenue stream, built around the media library purchase of bankrupt mobile streaming service Quibi in 2021.
Notice that Roku shouldn’t be desperately increasing its user base. The number of active Roku accounts grew 16% year-over-year in the recently released third quarter, stopping at 65.4 million names. The company has added a steady stream of new customers at a time when streaming stalwarts netflix (NFLX -3.07%) and waltz disney (SAY 0.33%) struggled to do the same.
What Weird means for Roku investors
Still, it never hurts to add a few names to that list of clients, especially if it also gives a streaming-channel-specific boost. Many people use their Roku TVs or media streaming dongles for years without paying attention to another streaming service belonging to the manufacturer of the platform. For example, I’ve been using Roku devices for years and never bothered to check the Roku Channel until this Friday. I can’t be the only user who discovered the Roku Channel through Weird.
And that’s important. If Roku can show growing interest in its ad-based streaming service, it will be able to negotiate higher payment rates for commercials on that channel. Weak ad sales have weighed on Roku’s financial results and stock performance in 2022. Stock prices are down 79% year-to-date.
The company would like to get out of this funk, and Weird could be exactly what the doctor ordered. The film may be silly at heart, but it’s also a high-quality product from a stable of household names, and Weird Al comes with a pre-made fan base in the millions. I’m not saying that Weird alone will save Roku’s bacon, but it’s a great start to a long-term campaign of rebuilding and recovery. Given that the stock is at the very bottom of the Wall Street basket right now, I think it’s a good idea to buy roku stock cheap.
Suzanne Frey, an executive at Alphabet, is a board member of The Motley Fool. Anders Bylund has positions in Alphabet (A shares), Netflix, Roku, T-Mobile US and Walt Disney. The Motley Fool holds and recommends Alphabet (A and C shares), Netflix, Roku and Walt Disney. The Motley Fool recommends T-Mobile US and recommends the following options: January 2024 long calls at $145 on Walt Disney and January 2024 short calls at $155 on Walt Disney. The Motley Fool has a disclosure policy.