In the latest game of streaming service musical chairs, FOX announced that it will buy ad-supported streaming video service Tubi for $440 million in an all-cash deal. As part of the agreement, FOX could potentially pay another $50 million over the course of the next three years in the form of deferred compensation and unvested options. FOX will pay for the acquisition from the net proceeds of its stake in Roku. Subject to regulatory approvals, the deal is expected to close by the end of June.
The purchase will support FOX in growing its direct-to-consumer audience and give it greater capabilities for digital advertising and personalization technology. Tubi will benefit from FOX’s broad advertising and distribution relationships.
Tubi says it is the world’s largest ad-support video on demand (AVOD) service with more than 20,000 movies and TV shows totaling over 56,000 hours of viewing time. Available in the U.S., Canada and Australia, the service is free to users who create an account and have access to one of 25 Tubi-compatible platforms including Amazon Fire TV, Roku, Comcast Xfinity, Cox Contour, PlayStation, Xbox, TiVO, Apple TV, iOS, Android and others. The company plans to expand into Mexico and the United Kingdom this year.
“Tubi will immediately expand our direct-to-consumer audience and capabilities and will provide our advertising partners with more opportunities to reach audiences at scale. Importantly, coupled with the combined power of FOX’s existing networks, Tubi provides a substantial base from which we will drive long-term growth in the direct-to-consumer arena,” said Lachlan Murdoch, executive chairman and CEO of FOX Corporation, in a March 17 announcement.
Tubi will remain an independent business, and it will continue to be managed by founder and CEO Farhad Massoudi. Tubi will continue to license content from 250+ content partners and may offer local and national news and sports programming. The AVOD service does not plan to create original content.
“FOX Corporation’s relationships with advertisers and distribution partners, combined with the company’s dominance in news and sports programming, will help Tubi continue to grow and differentiate itself in the high-growth ad-supported streaming marketplace,” said Massoudi.
“I am proud of what the team has already accomplished here at Tubi and we couldn’t be more excited about joining such a fast-moving, entrepreneurial company. We look forward to working together with FOX to accelerate Tubi’s leadership position in the market and bring new competencies to FOX,” Massoudi added.
In its 2019 year-end summary, Tubi had 25 million monthly active users and total viewing time to more than 163 million hours watched, an increase of 160% year-over-year. Internationally, Tubi had a 357% growth in total viewing time in Canada and Australia. To help support the company’s growth, Tubi added more staff. The San Francisco-based company now has 229 full-time employees, a 78% increase over 2018.
“Our growth over the last year is a clear testament to the success of our focused strategy in a now-cluttered marketplace,” said Massoudi. “We’re excited people globally have embraced Tubi as a complement to subscription video and aim to deliver an even larger library of premium content in 2020.”
Insider Take:
The buying and selling of streaming services – whether supported by subscriptions or advertising – is getting harder to keep track of. It really is like a game of musical chairs. Following Comcast’s acquisition of XUMO in February, FOX and Tubi are the latest players in the game, as FOX sells off its stake in Roku to have a full ownership stake of Tubi. Tubi already had big plans for growth and expansion this year, and that will be further supported by FOX’s financial backing, so it looks like they will both be winners.
