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Photo by Eugene Gologursky/Getty Images; Tubi CEO Farhad Massoudi

Tubi, the free ad-supported streaming service that was acquired by Fox last year, is expected to hit $700 million in revenue in 2022, according to a new UBS analysis.

Why it matters: That's up from its annual revenue of $145 million at purchase. Tubi CEO Farhad Massoudi told Axios that it's been able to grow quickly under Fox's leadership because the company isn't "distracted by a subscription streaming business that is a sinkhole of money."

  • Fox Corp. chairman and CEO Lachlan Murdoch has previously said Fox envisions Tubi becoming "a $1 billion business and a core pillar of Fox." Analysts expect Tubi to hit $1 billion in revenue as early as 2023.

Details: Part of Fox's strategy to grow Tubi is keeping it independent so that it can remain focused on supercharging growth.

  • Speaking to investors at UBS last week, Fox Corp. chief financial officer Steven Tomsic said that Tubi "probably leads" Fox's digital assets, arguing that Tubi's business provides incremental revenue to Fox's broader advertising portfolio, not just a supplement to linear TV ad declines.
  • 'Tubi runs its own rate internally in the business," he said. "Tubi is sold very specifically as its own asset and it's also a different demo from the broader portfolio." (The average age of a Tubi viewer is in their mid-30s.)
  • The company now has 400 employees, up from 250 early last year. Tubi's sales team is integrated into Fox Corp's larger sales team, and reports to Marianne Gambelli, president of ad sales at Fox. The two companies teamed up earlier this year for their first joint upfront presentation to advertisers.

Be smart: While Tubi is considered a separate asset, Fox has invested significantly in its growth, injecting capital, marketing and sales integration opportunities into the brand.

  • Massoudi told Axios the company is focused on growth. "It is not our focus to be profitable," he said. Tubi plans to invest more in expanding in the company's content library, as well as its personalization tech and marketing for user acquisition.
  • To date, the company has more than 35,000 titles in its library, up from 20,000 when it was acquired. A large range of content is necessary for the company to be able to personalize recommendations to very niche audiences. It has 40 million monthly active users.
  • "While everybody is philosophically a believer in content as king, we've always been saying that data is king," Massoudi noted.
  • "We have chosen not to go after the broadcast type of content that is meant to appeal to the average customer," he added. "We try to serve smaller communities ... and our ability to personalize is so key to our business."

The big picture: As the subscription streaming landscape becomes more saturated, most big entertainment giants have started investing in ad-supported streaming alternatives.

  • ViacomCBS acquired Pluto TV in 2019. Comcast acquired Xumo last year to help expand its digital ad inventory for Peacock. Roku plans to develop more than 50 original shows next year. Amazon is considering reaming its ad-supported service, IMDb TV, to lure more viewers.

By the numbers: A new analysis from TVision found that time spent with ad-supported streaming services surpassed time spent with subscription streaming services during the third quarter of this year.

Expand chart
Data: TVision; Chart: Baidi Wang/Axios
  • According to the Magid, a media research firm, Tubi's share of those who have used ad-supported streaming services increased by 4 percentage points to 13% from 2019 to 2021.

What to watch: As entertainment giants compete for more eyeballs on their ad-supported streaming services, many are beginning to invest more in original programming.

  • Tubi debuted its original series, "Freak Brothers," an animated show starring Woody Harrelson, John Goodman and Tiffany Haddish in October. It plans to invest in more original TV series, in addition to movies, next year.

Go deeper

Jan 12, 2022 - Economy & Business

D.C. journalists launch media startup called "Grid"

Grid

A group of D.C.-based journalists on Wednesday launched a new media company called "Grid" that focuses on hard news analysis and investigative reporting.

Why it matters: Grid debuts amid a flurry of new media companies looking to reach a similar audience of wealthy, elite professionals.

10 mins ago - World

Biden will move U.S. troops to Eastern Europe "in the near term"

President Biden boards Air Force One at Joint Base Andrews on Jan. 28. Photo: SAUL LOEB/AFP via Getty Images

President Biden said on Friday he plans to move U.S. troops to Eastern European and NATO countries “in the near term.”

Driving the news: “Not too many” U.S. troops, Biden added in remarks to reporters at Joint Base Andrew upon returning from a trip to Pennsylvania. 

Updated 35 mins ago - Energy & Environment

Bomb cyclone prompts blizzard warnings from Virginia to Maine

Computer model projection showing the intense storm off of Cape Cod on Jan 29, 2022, with heavy snow and strong winds lashing the coastline. (Weatherbell.com)

Blizzard warnings are in effect for 11 million people from coastal Virginia to eastern Maine as a potentially historic winter storm is set to slam the Mid-Atlantic and Northeast beginning Friday.

Why it matters: The storm will bring hazards ranging from zero visibility amid hurricane force wind gusts and heavy snow, to coastal flooding that will erode vulnerable beaches and threaten property from the Jersey shore to coastal Massachusetts.