The news: Roku is expanding its partnership with Google by integrating its content with the Google TV home screen. The companies began collaborating earlier this year with The Roku Channel debut on Android TV devices, Google’s connected TV operating system. Now, Roku Channel content will be recommended and searchable from Google TV home screens.

The two-pronged deal will help Roku reach audiences outside its own ecosystem, allowing it to better compete with other free, ad-supported TV (FAST) options, while also giving Google TV customers access to more free content.

Importance of free content: The saturation and rising costs of (ad-free) subscription video-on-demand (SVOD) services have led consumers to seek more affordable options for entertainment. Roku makes connected TV (CTV) devices, runs an operating system, and produces original content, giving its business several pillars to stand on.

• US FAST viewers will rise 5.5% this year, accounting for 32.6% of the population and just under half (47.7%) of CTV viewers, per our forecast. Like with premium SVOD services, there’s fierce competition for viewers from digital players like Tubi, Pluto, Vizio WatchFree+, and others.
• Google is not a leading US smart TV provider, but its 20 million monthly viewers and YouTube’s enormous reach still makes it a valuable platform for content providers.
• The search giant has made FAST options a pillar of its smart TV business, bolstering YouTube’s vast catalog with additions like The Roku Channel and allowing advertisers to buy space against 125 live channels. Roku’s original content includes films with A-list Hollywood stars as well as a wide range of reality TV content, like “The Great American Baking Show.”

Our take: Roku’s original content has turned out to be a valuable investment, allowing it to strike deals with CTV providers it otherwise wouldn’t have a relationship with because of competition over CTV sales and operating systems.

Google might not be willing to switch its smart TVs to Roku’s OS (an issue The Trade Desk will face as it enters the sector). Still, Roku’s suite of content that appeals to broad audiences has been enough to bring the two companies to the table.

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