Fox’s Tubi continues growth trend, 90% of FAST viewing on-demand

Fox’s free ad-supported streaming TV (FAST) service Tubi continued to see growth in the first three months of 2024, with the company on Thursday reporting user and usage gains alongside year-over-year ad revenue increases.

During Fox’s fiscal year 2024 third quarter conference call, CEO Lachlan Murdoch said the free streaming platform marked 22% revenue growth in the period, driven by a 36% increase in total viewing time (TVT) and 20% growth in monthly active users. The FAST now counts just under 80 million monthly active users, up from the 78 million at last count.

It marks another quarter of growth, though at a slower rate than the 31% yoy ad revenue growth in the same period a year ago.

Like most FAST services, such as Paramount’s Pluto TV, The Roku Channel, Xumo and smart TV OEM platforms Samsung TV Plus, Vizio WatchFree+ and others, Tubi offers a mix of live linear-style streaming channels as well as on-demand content.  Tubi initially focused on the on-demand aspect but has grown its linear FAST channel count to around 270, along with a collection of 250,000 movies and TV series. Notably, Murdoch on Wednesday’s earnings call said that across content available on the platform, 90% of viewing happens in the on-demand environment.

“This is very important because when the viewing comes on-demand and it’s proactively on-demand, as opposed to passively sort of sitting back and watching a FAST channel, that’s much more valuable to advertisers,” he said. The company plans “to make a big deal” about this factor during its Upfront presentation next week, he added.

Other FASTs are leaning into on-demand as well. Samsung TV Plus, for example, initially focused more on linear FAST channels but during this year’s NewFronts presentation said it plans to double the amount of VOD content available, after having already done so last year.

Fox also views Tubi as valuable to advertisers thanks to reach and engagement, according to Murdoch, with over 60% of Tubi users classified as cord cutters or cord nevers who aren’t reachable through traditional pay TV.

Speaking about overall advertising trends at Fox, Murdoch said they’re “clearly moving in the right direction” both in the scatter market and early Upfront discussions.

In terms of ad inventory pricing for its FAST service, where analysts on the call noted Disney yesterday mentioned some weakness in CTV CPMs, Murdoch cited confidence that Fox can maintain current CPM levels at Tubi. He noted it’s already been “very efficient” with Tubi CPMs, suggesting others haven’t taken the same route.

“I think some of our competitors priced themselves when they entered the AVOD market over the past 12-18 months very high and we’re seeing in the marketplace them having to drop CPMs as new entrants add supply to the market” which is impacting the market overall.

“It certainly has an impact on the market for advertising for Tubi, but from a CPM point of view, it’s not really going to be a big impact to us,” Murdoch added.

One factor contributing to a greater amount of streaming ad inventory is Amazon’s major jump into the ad-supported space in late January, where recent research indicates it’s already made a significant impact on the ad-supported ecosystem.

Speaking about quarterly growth, Murdoch attributed increased view time on Tubi to new viewers finding the platform, alongside “very efficient marketing” to attract new users.

“It’s becoming…a wider and wider known and loved brand in the marketplace,” he said.  

When it comes to marketing and getting the word out, in the first quarter of 2024 Tubi launched its inaugural Super Bowl campaign inviting viewers down a “Content Rabbit Hole.” Paramount-owned FAST competitor Pluto TV also made a Super Bowl ad debut with its “Potato Farms” campaign.

In terms of results from marketing respective FAST services, data from AdImpact found Tubi garnered 389 million ad impressions promoting its free streaming service in Q1, compared to 24 million ad impressions for Roku and 526 million ad impressions for promotion of Pluto TV in the period. (Note, these figures primarily reflect advertising for the services outside of streaming platforms, such as on broadcast TV and other TV media). 

As for usage of the service, Tubi has consistently been the leader among FASTs based on Nielsen’s The Guage monthly snapshot. That includes March when it captured 1.6% of TV time in the U.S., outpacing Pluto TV, The Roku Channel and SVODs Peacock, Max, Paramount+, and just behind Disney+.  

On the content side, separately Tubi this week announced a new beta initiative to greenlight film and TV projects from independent creatives through an interactive fan-fueled community dubbed Stubios, as part of an effort to attract younger and engaged audiences with programming they care about. And last month it inked a deal with DAZN for FAST linear sports channels, including women’s soccer in the U.S. and Canada.

Difficult comps ahead, not bundling Tubi with sports JV service

Murdoch on Tuesday noted that Tubi’s revenue growth won’t be as stark next quarter as it’s facing difficult comparisons to the year prior – where in the calendar year 2023 second quarter the FAST marked 47% yoy ad revenue growth.

Looking farther ahead for Tubi, the chief executive acknowledged that over the next three years or so, as the FAST continues to scale, it’s growth trajectory will be harder to compare against growth it’s seen over the last couple of years.

That said, “money will continue to flow from linear entertain television, particularly cable entertainment networks, into streaming” including AVOD, SVOD, and ad-supported SVODs, Murdoch said. “That trend… will not slow and Tubi will be one of the main beneficiaries of that money flow. So we’re confident in the continued growth of Tubi.”

Asked on the call by investment analysts about whether Tubi could fit into or be bundled with a new sports streaming service that’s expected to launch this fall under a joint venture between Fox, Disney and Warner Bros. Discovery, the chief executive indicated that won’t be happening.  

“Tubi’s a very different product” and at this stage the company hasn’t contemplated an opportunity to bundle the sports service with Tubi, he said. “I think it makes potentially more sense to bundle sports with other SVOD services, which you’ll likely see as we go forward.”

The entities previously said the yet-to-be-named sports streaming service could be bundled with apps including Disney+, Hulu and/or WBD’s Max.

Other metrics from Fox’s fiscal year 2024 Q3:

  • Total quarterly revenue of $3.4 billion declined from about $4 billion a year prior. 
  • Fox’s quarterly Adjusted EBITDA of $891 million was up 7% compared the same period a year ago.
  • Cable network programming segment reported total revenue of $1.47 billion, down yoy and including $1.1 billion in affiliate fee revenue, up 1% yoy, and $296 million in ad revenue, down from $316 million a year prior.
  • Cable segment EBITDA of $819 million was up 3% yoy.
  • Fox’s Television segment saw revenue dip yoy to $1.9 billion, including $939 million in ad revenue – the latter which declined primarily because Fox didn’t air this year’s Super Bowl and had fewer NFL games. TV affiliate fee revenue of $165 million was up 9% yoy.
  • TV segment EBITDA of $145 million was up 24% yoy.