Tubi Plans to Spend Over $100 Million Licensing Content in 2019 for Free Streaming Service
Tubi says viewing on its free, ad-supported video-on-demand service is surging — and it’s planning to spend more than $100 million this year licensing library TV shows and movies to keep the flywheel spinning.
In 2018, Tubi claims its ad revenue grew more than 180%, with fourth-quarter 2018 advertising revenue larger than all of 2017 combined. It also says total viewing time increased by 4.3 times over 2017.
Tubi’s content budget for 2019 will be “way more than double” last year, said founder and CEO Farhad Massoudi, claiming the company will be the biggest buyer in the AVOD segment. “We’re doing this with an engine that is a self-sustaining business,” he said.
Of course, $100 million is just a tiny fraction of the whopping $15 billion in cash spending on content Netflix is projected to reach in 2019. But Massoudi isn’t trying to vie against Netflix or other subscription VOD players, focusing instead on back-catalog hits, classics and niche content. The SVOD market “is heated and very expensive,” he said, noting that Tubi has no plans to produce original content. “We want to bring our customers as much of the other 99% of the content that’s available in the market.”
Tubi’s library is now around 12,000 movies and TV series — approximately 40,000 hours of content — licensed from over 200 content partners including Warner Bros., Fox, MGM, Lionsgate and Paramount. The notable holdout: Disney, which is prepping a major streaming push in late 2019.
It’s hard to assess the level of momentum Tubi actually has. The privately held company claims it was profitable in the fourth quarter of 2018 for the first time, but Tubi doesn’t disclose financial numbers or projections. Nor would Massoudi provide any actual metrics about users, viewing time or advertising impressions (except to say it notched 1,000 different advertisers in 2018).
For 2019, Tubi expects to operate at a loss as it invests in content to expand its free movie and TV lineup. “We are not focused on maintaining profitability,” said Massoudi.
To fund new content spending as well as marketing, Tubi in December closed a $25 million in debt financing from Silicon Valley Bank. The San Francisco-based company, founded in 2010 as an ad-tech platform, has raised about $26 million in venture capital to date. Tubi has around 140 employees, nearly doubling headcount over the past 12 months.
Currently, Tubi’s service is available only in the U.S. and Canada. In the next few months, the company expects to launch in additional international territories. “We’re doing the analysis now,” Massoudi said. Tubi currently has some content rights that extend outside North America but will be ramping that up as it heads overseas.
Tubi got a big boost in November 2018, when the service launched on Comcast’s X1 platform, available to some 20 million U.S. video customers alongside Netflix, YouTube and Amazon Prime Video. Tubi’s free service also is available on Amazon’s Fire TV, Roku, iOS, Android, Chromecast, Samsung televisions, and Xbox and PlayStation consoles.
Competition in ad-supported VOD has been less intense than in the subscription-video space, but there’s been a recent upswing in investments in AVOD services. Those include Roku’s free Roku Channel, Walmart’s Vudu, and Amazon’s IMDb, which launched Freedive this month. Last week, Viacom acquired Pluto TV, a free AVOD service specializing in TV and episodic content, for $340 million.
In February, new titles coming to Tubi include “American Ultra,” starring Jesse Eisenberg, Kristen Stewart, and Connie Britton; and “Warm Bodies,” with Nicholas Hoult, Teresa Palmer, and John Malkovich. AVOD exclusives on Tubi include “Pride,” “Blindsided,” “Repentance,” “Girl Most Likely,” “Seal Team Six: The Raid on Osama Bin Laden,” and “Hostel: Part II.” Other titles coming to Tubi include “Blood Father,” “Empire State,” “Coriolanus,” “Submarine,” “Winter’s Bone,” “Amusement,” “Whiteout” and “Reservoir Dogs.”
The most-viewed movies on Tubi currently are “Repentance,” “Knock Knock,” “Drive Angry,” “Paddington,” “The Iceman,” “Baytown Outlaws,” “The Cabin in the Woods,” “Sucker Punch” and “Barnyard.”
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