Speaking at the Deutsche Bank 30th Annual Media, Internet & Telecom Conference, COO John Nallen said that Fox Corporation’s ad-supported streaming service Tubi will not be getting a premium pay tier.
“The ubiquity of to be on 25 different devices around the U.S., focused on the U.S. and the ability to just access it on a free basis is the secret sauce of Tubi,” Nallen said. “So we don’t have any expectation of tiering it or adding a subscription product to Tubi.”
In addition, Tubi will retain its limited ad load of four to six minutes per hour of programming, an aspect that “makes the service unique… some of our competitors deliver double or triple the amount of advertising,” Nallen added.
Fox acquired Tubi in 2020 for $440 million and now, according to Nallen, is expected to generate more ad revenue in 2022 than Fox’s broadcast network. According to analysts, Tubi is expected to hit $700 million in revenue in 2022.
The incremental revenue growth this year is due to the nationwide midterm elections coming this November, Nallen said.
While Fox has transferred some of its local news over to Tubi, the CEO was clear that he doesn’t see the AVOD platform as a place for the company to “take national content [Fox Sports and Fox News] and bring it over as an adjacency to that national content.” The same goes for live sports content and live national news content.
The reason behind this is that the company’s core business, which provides exclusive content to distributors in news and sports, remains a contrast to the free content on Tubi. This gives MVPD distributors who pay retransmission and carriage fees for Fox broadcast and cable channels, a “guarantee” that Fox live NFL, MLB, and NASCAR content isn’t “leaking into a free distribution environment somewhere else.”
Even without live sports, there is a lot that Tubi has to offer with its 41,000+ catalog titles and around 40 original programs. Nallen boasted that Tubi has expanded its library by 60% and “we’ll probably double that number next year.”
While these 40 new originals weren’t exactly big-budget premium original shows like you find on the major SVOD services, Tubi sticks with its “deep library” of content. Also, Tubi is still able to license “95% of the library” on a revenue-share basis, said Nallen.
Tubi’s programming includes movies and TV titles from Fox Entertainment, MGM, Paramount Pictures, Lionsgate, Sony Pictures, Warner Bros., NBCUniversal, Disney, among others. The service also has original shows like the animated series “The Freak Brothers” and true-crime show “Meet, Marry, Murder,” which will have an increasing role in the Tubi programming mix.
In February, Fox announced the AVOD service had its best quarter ever, with a total of 3.6 billion hours streamed on Tubi, up 40% from a year ago. The streamer currently has 51 million monthly active users.
Thus, bringing us back to why the AVOD service will be one of the main growth drivers at Fox.
“It’s a very strategic asset,” Nallen said. “And probably next year, it will be a larger asset than the entertainment network from a revenue standpoint. That’s the kind of growth that we’re experiencing in Tubi. And if I look long term, it will be one of the clear growth drivers inside of Fox overall.”
Nallen added that the AVOD category is projected to grow revenue by 400% ($31.5 billion) through 2026. In terms of revenue, Tubi is a leader and “a core business for Fox.”
Tubi
Tubi is a free video streaming service that includes on-demand access to 200,000+ movies and TV episodes - more than any other streaming service. Its ad breaks are shorter and less frequent than most free services. Fox executives have called their service “TV on steroids.”