Tubi Usage Doubles, Upfront Commitments Triple as Fox Nurtures AVOD Growth

Fox Corp.’s streamers will get a cash boost in the coming year as the media company looks to lean further into its growing portfolio of ad-supported and subscription streaming services. In the next year, the company plans to invest an additional $200 million-$300 million in the company’s growing streaming and digital businesses, including free ad-supported streaming service Tubi, the company’s news and lifestyle-focused subscription service Fox Nation and its free ad-supported streamer Fox Weather (which is slated to debut in the next quarter). That investment, which Fox Corp. executives detailed in a call with investors Wednesday, comes as the company is tracking considerable streaming growth, especially on its ad-supported side. Tubi, the biggest streaming jewel in Fox Corp.’s crown, ended the fiscal year with 3 billion hours of total viewing time on the platform, up 50% compared to a year ago. During June, total view time surpassed 900 million hours, up more than 50% over the prior-year quarter. (Fox prefers to use “total viewing time” as its metric when it comes to engagement, seeing as it monetizes viewers through advertising, not subscriptions or sign-ups.) Fox Secures Low-20% CPM Hikes in Upfront ‘for the Ages’ Tubi ad revenue continues to surge Advertising revenue is following. Tubi “comfortably” surpassed $100 million in advertising revenue in the quarter, according to Fox Corp. chief financial officer Steve Tomsic, and over the full fiscal year, Tubi brought in more than $400 million in advertising revenue. During the most recent upfront, Fox more than tripled Tubi's upfront dollar commitments compared to last year, and more than doubled the number of brands buying inventory on the service. But as Tubi looks to push further into original series and movies, as well as branch out into other content areas like news and sports to continue driving that advertising interest, the company is not planning on making any big-swing content investments. Instead, the service is focused on targeted, cost-efficient programming. “Let me be crystal clear about one thing: Tubi’s original programming strategy is very different from the strategies of an SVOD streamer,” CEO Lachlan Murdoch said. “We have no interest or plans in investing in high-cost programming to drive subscriber acquisition, as we are not in the subscriber business. We are focused on delivering programming that delivers total viewing time and enhanced monetization in very short order. The return on our programming investment is measured in weeks, not years.” In other words: “We’re purely interested in the time they spend on the platform and the amount of content they’re consuming,” Murdoch said. Ahead of this year’s upfronts, Tubi laid out its original content plans, which look to build out Tubi’s content offerings with 140 hours of original programming that will run the gamut from thrillers, horror, sci-fi, romance, westerns and Black cinema. “Tubi Originals has only just begun to launch but we are seeing the return in very short order,” Murdoch said. “These movies are very price-effective and we're able, through Tubi's technology, to target them very specifically to very well-defined genres that we know, if we promote them correctly on the Tubi platform, will drive a consistent expected amount of viewing, which we can then monetize very efficiently.” As much as Fox Corp. was forthcoming about Tubi, it was tight-lipped when it came to sharing specifics about its subscription service Fox Nation, which debuted in late 2018. Murdoch said that Fox’s direct-to-consumer subscription service Fox Nation continues to add customers, although the company has declined to share the number of subscribers. With that said, there were other signs the company was willing to share that point to some stickiness for the service: the platform “has tremendously low churn,” and sees about 80% of users testing out the service via a free trial convert into paying members, Murdoch said. Still focused on linear As Fox Corp. pushes further into streaming, which delivers younger and more diverse viewers than its linear properties, it was careful not to say that those inroads are cannibalizing the company’s legacy business. “The Tubi revenue in our upfront is entirely incremental, and that’s really important,” Murdoch said. “We were careful to not move revenue from one pocket to another and say look at all the revenue we've been able to push to Tubi. The Tubi revenue is entirely incremental to what we otherwise sold on our linear assets.” The company is also hoping to capitalize on opportunistic advertisers who might look to Tubi in the scatter market. After hitting the triple revenue marker for Tubi during the upfront, the company stopped selling upfront inventory so it could reserve a chunk of Tubi impressions for the programmatic market. “As the year progresses, we’ll do extremely well through our programmatic advertising and the CPMs we get through programmatic,” Murdoch said.