Tubi is hitting profitability by attracting younger audiences willing to watch ads, a strategy other streaming services are now pursuing.
The Fox Corp.-owned free streaming platform was previously considered a second-tier service alongside Pluto adn The Roku Channel, but is now gaining traction.
In November, Tubi accounted for 2.1% of total streaming minutes on nielsen’s The Gauge, surpassing nbcuniversal’s Peacock and Warner Bros. Finding’s HBO Max. YouTube currently leads in viewership.
“Our fans come in, and they behave like [subscription streaming] viewers. The only difference is they don’t pay for it,” saeid Tubi’s chief marketing officer,Nicole Parlapiano.
Netflix’s recent move to introduce an ad-supported tier demonstrates the growing recognition of this model’s potential. Tubi’s success suggests that a large audience is receptive to free content supported by advertising.
Why Fox’s Tubi is thriving while other streaming services struggle
Fox Corporation’s stock is up more than 40% this year, while other media stocks haven’t fared nearly as well amid a sea of uncertainty.
The company offloaded its entertainment assets to Disney in 2019, and its TV business – broadcast network Fox and cable networks like Fox News – consist mostly of news and sports. In 2020, the media company acquired Tubi for $440 million.
As then, Tubi had been Fox’s main answer to streaming until recently, when the company launched Fox One, a direct-to-consumer streaming service of all Fox content for $19.99 per month. Murdoch has emphasized there are no plans for Fox One to produce original or exclusive content, leaving Tubi to shine with a digital and cost-conscious audience.
Free reigns
Paige Bulera, a 23-year-old from Buffalo, New York, said she doesn’t believe in paying for disappointment. That’s why Tubi has emerged as the winner amid all of her streaming apps.
Bulera said she watches movies more frequently enough than the average person and uses her sister’s logins for nearly all of the major streaming services. But with each subsequent price increase, she’s finding less satisfaction with their investment.
“Not only are they going up in price, it seems like with each price increase you’re losing things,” Bulera told CNBC. “It’s like now you can’t share accounts with people on Netflix, or even if it goes up in price, there’s still going to be ads.”
Her slate of movies heavily leans toward horror. Tubi said the platform has the largest collection of horror content with 9,000 titles, while also offering fan favorites spanning genres like “Coraline,” “The Wolf of wall Street” and “Tom and Jerry.”
“With Tubi, it’s fully free – you know you’re getting ads, but it’s promoted in a way where you can watch old movies, new movies, or Tubi originals, so that’s why I’m a big fan of the platform, mainly as of the fact that it’s cost-effective,” Bulera said.
A recent report from MoffettNathanson notes that streaming engagement remains strong at YouTube, followed by free, ad-supported platforms that include FAST channels like Tubi, Paramount Skydance’s Pluto, and Roku’s.
Tubi Courts Younger Viewers with Creator Content and Nostalgia, Seeing Strong Retention Rates
Tubi, the ad-supported streaming service, is actively working to attract and retain younger audiences, notably Gen Z and Millennials, through a strategy focused on creator-driven content, popular franchises, and even classic television. The platform reports a notable portion of its viewership – 58% – skews young, and is seeing positive results from its efforts.
A key component of Tubi’s strategy is “Tubi for Creators,” launched in June 2023, designed to integrate content creators into the Hollywood ecosystem.According to Rich Bloom, head of Tubi for Creators, the initiative aims to provide creators with a pathway to wider audiences while preserving their authenticity and creative control. The platform has rapidly expanded the program, growing from six creators and 500 episodes of content at launch to over 100 creators and more than 10,000 episodes [https://corporate.tubitv.com/press/tubi-announces-tubi-for-creators-to-bring-more-creators-to-hollywood/].
Tubi is partnering with established YouTube personalities, bringing series like Dan and Riya’s “Beverly Valley High” and funnymike’s “mr. Creepy Eyes” to the platform. It’s also actively seeking content through partnerships with self-reliant filmmakers, including projects initially funded through Kickstarter [https://updates.kickstarter.com/your-new-watch-list-21-kickstarter-funded-films-streaming-on-tubi/]. Bloom notes that this content is attracting new, younger viewers with a retention rate exceeding that of Tubi’s general new viewer base.
The platform has found particular success with young adult movies, notably the “Sidelined” franchise starring TikTok personality Noah Beck. The two films have collectively garnered nearly 20 million viewers, with the median age of viewers watching the sequel, “Sidelined 2: Intercepted,” being just 21 years old.
Tubi executives emphasize that younger audiences are interested in long-form content, provided it’s relevant to their interests. “We are really proving that we can bring young viewers to a long-form streaming platform,” said Tubi’s Lewinson. “There’s a perception that they’re only interested in short-form – completely not accurate. So long as you have relevant content for their fandom, they’ll come to Tubi.”
Interestingly, Tubi is also experiencing success with older content, as Gen Z viewers are engaging with classic shows like “Columbo” and “Murder, She Wrote,” demonstrating a leaning towards nostalgia.
The growing younger demographic is also proving attractive to advertisers. Lewinson highlighted the importance of acquiring and producing content that draws in these viewers, noting that the platform tracks their viewing habits to offer more relevant content.”They’ll come in to watch ‘Sidelined,’ but then we’re following their journey to see what else they’re watching on the platform, and we’re making sure that we have plenty of those types of categories for those viewers to watch.”
Disclosure: Comcast owns nbcuniversal, the parent company of CNBC.Comcast is planning to spin off Versant, which would then become the parent company of CNBC.