Roku, Fox, and the threat of streaming blackouts for cord cutters

Let’s talk about some Super Bowl drama.

I’m not referring to the game itself, but rather the faceoff between Roku and Fox that occurred a few days beforehand. On Thursday night, Roku announced that it was removing Fox apps from its streaming players and smart TVs as a distribution deal between the two companies expired. In response, Fox accused Roku of using its customers as “pawns,” and even had Sean Hannity and other Fox News personalities admonish Roku on air. By Friday evening, however, Roku and Fox reached a new deal, and the latter’s apps were restored in time to stream the big game.

But while it all worked out in the end, the public fight contained echoes of an issue that’s become all too common with traditional TV service: Constant carriage disputes, followed by occasional blackouts. It’s reasonable to wonder if this will become the new normal for streaming TV as well.

After a week of reflection—and too much leftover Super Bowl party food—I’m not feeling too worried about it. But I’d feel better still if Roku provided some assurances of its own.

Why Roku’s disputes aren’t like cable’s

When a channel goes dark on cable or satellite TV, the dispute tends to involve carriage fees. ESPN, for instance, might want more money from AT&T to carry its channels on DirecTV and AT&T TV Now. AT&T might resist because it doesn’t want to raise its own prices accordingly. As a negotiating tactic, ESPN would then pull (or threaten to pull) its channels, imploring AT&T customers to complain and essentially advocate for their own price hikes.

Roku, however, isn’t paying carriage fees for Fox content, nor is it charging customers to access them. Instead, Fox’s apps are free downloads, with some content locked behind pay TV authentication. (The Super Bowl live stream was free for everyone.) Last week’s dispute was likely about ad revenue, and the cut of inventory that Roku gets from advertising in Fox apps.

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The Fox Sports app wasn’t the only way to watch the Super Bowl, but it was back in time for kickoff.

The result is a kind of role reversal, in which the platform holder (Roku) is angling for more money, not the content provider (Fox). And as sources told Bloomberg last December, Roku isn’t above threatening blackouts when it wants a bigger share.

This is admittedly a lot of inside baseball, but the thing to keep in mind is that unlike with cable’s carriage disputes, these negotiations don’t directly contribute to higher prices for consumers. The Super Bowl still streamed for free in the end, the amount of commercials was the same, and the cost of Roku products hasn’t changed. By comparison, when a cable or satellite carriage dispute ends, price hikes tend to follow.