FOX CEO Lachlan Murdoch said this week that its free, advertising video-on-demand (AVOD) service, Tubi, does not need the sort of scale that a subscription-based service like Disney+ or HBO Max does for a high level of return.
Murdoch spoke at a Bank of America Securities conference this week.
“Scale or distribution is obviously very important — But particularly if you’re a subscription, video-on-demand service — it’s becoming a more and more crowded marketplace. To earn a share of the consumer’s wallet … on a monthly basis, whether it’s $5 or $8 or $10 for your content, will become increasingly difficult. And that’s why you can see many media companies that have bet on a subscription video service continuing to invest and spend a tremendous amount of their capital on content and programming to feed those services,” he said. “We need to be able to let people know about 35,000 titles that are on Tubi. So Tubi doesn’t really need the scale that a subscription video-on-demand service requires, and we’re certainly seeing that in the performance of the business.”
Since acquiring Tubi last year for $440 million to expand its content portfolio, Tubi’s viewership has grown consistently to the point where it has been referred to as “TV on steroids.” Tubi has been bringing in a younger, more diverse audience that does not necessarily watch broadcast or cable at all.
“Imagine that we walked into a movie theater right now with 100 people and said, ‘How many people want to watch Star Wars?’ You’d be lucky if 20 people raised their hand,” said Tubi founder and CEO Farhad Massoudi last spring. “Now, for one-hundredth of the budget for Star Wars, I go license 100 movies, and now I can easily super-serve 60 people in that room. And so not only do I reach a larger audience, but it’s also a far better business. So we’re moving away from a world where the schedule was limited, and therefore you have to appeal to the broadest audience, to a world of narrowcasting, which is both a far better business and appeals to a larger audience.”
Tubi is a free video streaming service that includes on-demand access to 35,000 movies and television shows - more than any other streaming service. Fox executives have called their service “TV on steroids.”
Tubi’s programming includes films and television series from Fox Entertainment, MGM, Paramount Pictures, Lionsgate, Sony Pictures, Warner Bros., NBCUniversal, Disney, and more.
At first, FOX didn’t plan on original content for Tubi. “Unless someone really thinks that they can make big bets on that watercolor show (like a Game of Thrones),” said Adam Lewinson, chief content officer for Tubi earlier this year, “I don’t know that it’s the best bet to make from a programmer’s standpoint.” Today, that opinion has changed, as FOX CFO Steve Tomsic said earlier this year the company would create original content that was “cost-efficient.”
During this week’s conference, Murdoch said that Fox’s other streaming business, the subscription-based Fox Nation, is continuing to do very well.
“It’s very targeted to Fox News super fans,” Murdoch said. “We have a tremendous platform to capture them and offer them an added service in Fox Nation. So Fox Nation doesn’t need the scale either in the way that some of the other entertainment on-demand services require.”
Fox has a third digital channel launching in October — Fox Weather — that Murdoch mentioned during the conference. He said the new network would be a free, ad-supported streaming (FAST) channel launching on multiple platforms, but did not go into specifics as far as which platforms it would launch on.