Roku had a hell of a quarter, hitting over $1 billion in revenue for the first time. They even moved to report streaming hours over household counts—like Netflix—a metric the industry deems more transparent and valuable in today’s streaming-saturated market. So naturally, Wall Street rewarded this transparency and growth by sending Roku’s stock plummeting by double digits.
In further proof that no good deed goes unpunished, Roku’s platform revenue push, despite its appeal to investors, has stirred unrest among the very media companies that fill its platform. This new strategy aims to extract more “platform revenue” via Roku Pay and ad inventory sharing agreements, which together form the backbone of Roku’s revenue model. Some of the streaming giants who once saw Roku (and others) as a valuable distribution partner now see it as a taxing middleman, claiming an increasingly oversized share of their revenue.
Roku’s Platform Strategy
Roku’s platform revenue strategy relies on two main pillars: subscription channels and ad-supported channels. Both help grow Roku’s top line by reducing what content providers ultimately take home from each transaction on its platform.
First, there’s Roku Pay for transactional channels—any channel that requires payment to install or uses subscriptions or in-app purchases. In these cases, Roku enters into a revenue-sharing agreement, taking 20% of the net revenue while the channel provider keeps 80%. So, instead of receiving the full amount from a subscription or purchase, content providers see their share reduced by Roku’s 20% cut.
Advertising revenue is the second and larger piece of Roku’s platform strategy. For ad-supported channels, Roku mandates an “inventory split” model: content providers run their own ad servers but must allocate 30% of their ad inventory to Roku. Roku keeps 100% of the revenue from this 30% share, while the channel retains all revenue from the remaining 70%. This inventory split means that Roku can earn ad revenue from a channel without even having to fill the ad slots itself, though it reserves the right to sell and keep all proceeds from any inventory it does fill.
For media companies, these aren’t just similar to platform taxes—they are platform taxes. Every dollar Roku makes from revenue sharing or the ad inventory split is a dollar the content providers don’t get to keep. Roku’s “platform revenue” doesn’t come out of thin air; it comes directly out of the earnings that media companies would otherwise control.
Controlling Distribution
Some media companies are already finding ways to keep middlemen out of their pockets by leveraging bundles. Disney’s Hulu, Disney+, and ESPN+ bundle encourages users to sign up directly through Disney’s ecosystem, bypassing Roku’s “platform tax” altogether. It’s a model others are beginning to mimic, offering direct sign-ups and exclusive deals that keep platform gatekeepers out of the revenue stream and ensure full access to customer data.
2025 Outlook
As Roku leans harder into platform fees, streaming services are looking for ways to minimize their reliance on Roku and other gatekeepers. Through bundling, direct sign-ups, and possibly even legal challenges, streamers are exploring how to keep more of their revenue in-house. With Roku eager to grow platform revenue and streaming giants fed up with platform taxes, the next few years could redefine the power dynamics between platforms and content providers.
The Take
As Roku doubles down on what it calls “platform revenue” and streaming giants see as “platform tax,” media companies are gearing up to sidestep the toll gatekeepers are imposing on their subscriptions. With bundling strategies, direct sign-ups, and perhaps even legal showdowns on the horizon, a major battle over control of streaming revenue is looming. Platforms like Roku have become essential for content providers to reach audiences, but the mounting tension over platform taxes could spark a turning point. This tug-of-war could shape the landscape of streaming—and it’s one battle that anyone invested in the future of media should keep an eye on.
