Gobbled up by ViacomCBS and Fox for $340 million and $440 million respectively, and each averaging over 30 million monthly active users, neither Pluto TV or Tubi have any trouble these days convincing the media tech industry that free-to-consumer, ad-supported streaming is a thing.
But speaking Wednesday during the Streaming Media Summit track for Future’s Fall TV 2020 virtual conference, the now high-flying founder/CEOs of these respective AVOD services vividly recall the hard times, when media-tech investors were only interested in subscription services.
Venture capitalists did not see free-to-consumer, ad-supported streaming as much of a business.
“Ads were going the way of the dodo,” recalled Pluto TV’s Tom Ryan, talking about the bygone days leading into his ad-supported streaming service’s 2014 launch. “Everybody thought that everything would look like an SVOD product.”
Tubi’s Farhad Massoudi noted that venture capitalists “tend to invest in the things they’d use themselves. And if they’re wealthy and have only two free hours a week, all they’d watch is Game of Thrones, and they didn’t see the point of ad-supported TV.”
Executives at media companies down south reinforced Silicon Valley’s belief that only subscription video services bolstered by expensive original series hits could make it in the video business.
“Silicon Valley doesn’t want to touch media, because they have a history of making bad bets,” said Massoudi, who also launched Tubi in 2014. “So they’d call a buddy at a random studio, and he’d tell them they need to invest in a subscription, ad-free service, and they’d need an expensive title like Game of Thrones to be successful.”
Ryan said that a little coastal elitism perhaps also factored into the VC myopia.
“They were not thinking about Middle America so much,” he said.
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