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Roku Stock Gains on Report It Plans to Develop 50 Original Shows In New Content Push

Roku will develop 50 original shows over the next two years, the Wall Street Journal reported Friday, as the streaming hub finally moves into content creation after years of reluctance.

Roku  (ROKU) - Get Free Report shares bumped higher Friday following a report that the streaming service hub will move into content development, with plans to produce as many as fifty shows over the next two years.

The Wall Street Journal said Roku will change tack from its previous insistence on staying out of the content game with a plan to leverage the 155 million people that use is streaming aggregation service. The Journal said Roku wants to direct more of those customers to its Roku channel, where it gets a full return on ad sales, compared to the 30% cut it gets from ads viewed on other apps on the platform.

The report said Roku would likely spend between $250,000 and $750,000 for an unscripted episode, with costs rising to as high as $5 million for a scripted one, although that would still be 'significantly less' than budgets typically allocated by rivals such as Netflix  (NFLX) - Get Free Report and AT&T  (T) - Get Free Report.

Roku shares were marked 3% higher in e trading Friday to indicate an opening bell price of $237.00 each. 

Earlier this month, Roku posted stronger-than-expected third quarter earnings but noted that supply-chain disruptions hit TV sales that incorporate its streaming service.

Roku also said it expects lower sales and earnings in the fourth quarter as struggling TV sales due to lack of inventory continue to impact its bottom line.

Roku reported third-quarter net income of $68.9 million, or 48 cents a share, after the closing bell on Wednesday, well ahead of the 9-cent-a-share forecast by analysts polled by FactSet. Revenues, however, came in at $680 million, below the Street consensus forecast of $684 million.