Tubi, the streaming service acquired last year by Fox for $440 million, will grow to be a billion dollar business, according to Fox CEO Lachlan Murdoch.
Speaking on Fox’s fiscal second-quarter earnings call Tuesday, Murdoch called Tubi “an exciting growth engine for the company and a key strategic platform not only for our digital expansion, but also our broader reimagining of Fox’s broadcast model for the future.”
Tubi saw increases in key metrics that exceeded Fox’s expectations, Murdoch said. In the first half of the year, unique viewers more than tripled and total view time grow by nearly 70% and revenue more than doubled.
Murdoch said that total view time was the key metric Fox looked at because it has a direct and proportional relationship to advertising inventor and revenue opportunities.
Fox expects Tubi revenues to double this year to $300 million. “As we look out a few years, we envision Tubi becoming a billion-dollar business and a core pillar of Fox,” Murdoch said.
Murdoch noted that while other media companies pour billions into subscription VOD streaming services, ad supported streaming is Fox’s direct-to-consumer strategy.
SVOD presents the potential to lose billions of dollars, he noted. “It is very crowded. We see it is very hard to stand apart and differentiate ourselves within SVOD and that’s why we’ve chosen to embrace AVOD.”
He said Fox has been able to grow Tubi by reinvesting its profits and not by losing billions. “The business will ultimately become a very profitable one for us."
Tubi has been neutral from a profit and loss perspective so far this year, said Fox CFO Steve Tomsic. The company will need to increase its investment in Tubi to grow it to be a billion-dollar business. “Over time as we take our foot off the gas in terms of investing for growth, you will see some pretty good conversion of revenue into bottom line margin as this business gets to scale,” he said.
In terms of programming, Fox has added shows like The Masked Singer to Tubi’s content library, which has added to view time and reach for advertisers.
Advertisers also benefit from Tubi’s technology, which is being constantly upgraded to provide better data and results to digital advertisers, Murdoch said.
Murdoch cited a study with a major insurance brand that used Tubi’s Advanced Frequency Management to reduce ad repetition. Frequency was reduced by 360%.
“Rather than continuing to show the same ad to the same viewers, as is so often the case across other AVOD platforms, Tubi’s tool enabled this insurance company to advertise to nearly 100,000 more households within the same ad buy,” he said.
As a result of the test, the brand made a multi-billion-dollar ad commitment to Tubi. “The brand is also a Fox advertiser now as well,” Murdoch said.
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