Media streaming technology expert roku (ROKU -4.34%) pulls out all the stops for its latest nugget of original content. The company encourages living daylight out Strange: The Al Yankovic Storyand then using the film itself to popularize Roku’s own streaming channel.
I think that is absolutely correct. This marketing double whammy appears to be a defining moment for Roku’s ad-supported streaming service.
Strange is a tongue-in-cheek biopic about comedy musician Weird Al Yankovic, starring Harry Potter star Daniel Radcliffe in the title role. western world Headliner Evan Rachel Wood plays Madonna, Weird Al’s love interest and Nemesis.
This is a passion project for Weird Al who is known as a writer, producer and executive music producer. This idea began in 2013 as a short trailer for a fake Weird Al biopic produced by Will Ferrell’s comedy studio Funny or Die. This video went slightly viral and Weird Al’s fanbase wanted to see a full movie to go with the trailer. A decade later, the creative minds behind the film considered taking this joke to the next level, and the project turned a corner when Radcliffe agreed to star in it.
With a bona fide Movie star on the list, Roku agreed to invest in the feature-length film. With Roku’s support, the crew had a $12 million budget to work with. According to Yankovic, other studios were interested, but only Roku “pulled out their checkbook” during negotiations.
Originally slated to film in Georgia, production was moved to Los Angeles due to cost concerns. This change allowed Weird Al to show drop-in cameos from a long list of Hollywood luminaries — who always play Another entertainment luminary and not herself.
Strange premiered at the Toronto Film Festival in September and won the People’s Choice Midnight Madness Award. Sounds right.
How is Roku promoting this movie?
At first glance, the film got the usual run of regular studio support.
- Radcliffe, Yankovic and Wood toured the late-night talk shows and other media.
- Roku ran a sweepstakes lottery with a trip to the premiere, all expenses paid, and a 65-inch Roku TV.
- T Mobile (TMUS 0.45%) committed as the main sponsor. Telekom’s involvement was inspired in part by a wide-open creative playbook and in part by Roku’s heavy marketing investments.
- Of course, Weird Al has hyped the upcoming film at more than 100 stops on The Wretched Return of the ridiculously smug, ill-advised Vanity Tour. The series of mostly intimate venues began in April and ended the week before with an extravaganza at New York’s Carnegie Hall StrangePremiere.
- As the proverbial icing on the cake, the film was shown on the legendary video billboard in Times Square on November 4th, the day the streaming video version started. This is prime promotional real estate that must have cost Roku a pretty penny.
That would be par for the course for a guaranteed blockbuster from a major film studio, but we’re talking a $12 million budget and a newcomer to the film production business. Strange isn’t Roku’s first original production, but the company’s originals are almost always series rather than movies.
And Roku isn’t exactly flush with cash reserves. The company has $2 billion in cash equivalents on its most recent balance sheet, but only after issuing $1.49 billion in new shares over the past three years. The company isn’t shy about asking investors for help to keep the lights on.
Make the most of a big investment
As a lifelong Weird Al fan, I watched the Tampa episode of the last tour and checked it out Strange with my first cup of coffee on Friday. The film has received a respectable quality rating of 87% from critics on Rotten Tomatoes and a 93% thumbs-up rating from critics Google User. That sounds about right again. This is a thoroughly entertaining parody of the biopic genre, and the cast has enough big names to turn some heads. If you get people to see it, they should enjoy it.
And when viewers come, they’ll be treated to multiple non-skippable commercial breaks. The usual collection of laundry detergent and auto insurance commercials has minimal screen time, but each commercial break contains two mandatory ads. The first 40-second spot is for main sponsor T-Mobile, which makes sense. The second extra-long promotional reel is all about the Roku Channel itself.
You don’t see that often, do you? Sure, TV and radio stations feature their own services as often as possible in their content streams, but it’s rare that a full-fledged commercial touts the merits of the channel you’re watching. Additionally, the first commercial break begins with a brief appearance by Weird Al himself, making sure the viewer knows this is the Roku channel. The company took every opportunity to advertise the underlying streaming service here.
So Strange looks like an effective tool to bring more viewers into the Roku Channel experience. This streaming platform is a key part of Roku’s ad-based revenue streams, which were built around its 2021 purchase of bankrupt mobile streaming service Quibi’s media library.
Mind you, Roku shouldn’t be desperate to increase its base user base. Active Roku accounts grew 16% year over year in the recently reported third quarter, stopping at 65.4 million names. The company has attracted a steady stream of new customers at a time when streaming was relentless Netflix (NFLX -3.07%) and Walt Disney (DIS 0.33%) tried to do the same.
What Strange means for Roku investors
Still, it never hurts to add a few names to this customer list, especially when it also gives the streaming channel a special boost. Many people use their Roku TVs or media streaming dongles for years without paying attention to another streaming service from the platform manufacturer. For example, I’ve been using Roku devices for years and never bothered to check out the Roku channel until this Friday. I can’t be the only user who discovered the Roku channel thanks Strange.
And that’s important. If Roku can demonstrate increased interest in its ad-based streaming service, it can negotiate higher pay rates for commercials on that channel. Weak ad sales weighed on Roku’s financial results and stock performance in 2022. Share prices are down 79% year-to-date.
The company would love to get out of this funk, and Strange could be just what the doctor ordered. The film might be goofy to the core, but it’s also a quality product from a number of household names, and Weird Al has a ready-made fanbase in the millions. I’m not saying that Strange alone will save Roku’s bacon, but it’s a good start to a long-term campaign of rebuilding and recovery. With the stock currently at the bottom of Wall Street’s bargain bin, I think it’s a good idea to pick up some Roku stock cheaply.
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Anders Bylund has positions in Alphabet (A shares), Netflix, Roku, T-Mobile US and Walt Disney. The Motley Fool has positions in and recommends Alphabet (A and C shares), Netflix, Roku, and Walt Disney. The Motley Fool recommends T-Mobile US and recommends the following options: long January 2024 $145 calls at Walt Disney and short January 2024 $155 calls at Walt Disney. The Motley Fool has a disclosure policy.