Tubi
2020
Why
In April 2020, Fox Corporation acquired Tubi, a rapidly growing, free ad-supported streaming service (AVOD), for approximately $440 million in cash. The purpose of this acquisition was to provide Fox with a crucial, established digital distribution platform to capture younger cord-cutting audiences and seamlessly transition its lucrative traditional television advertising business into the digital streaming era.
Impact
Tubi transformed Fox's long-term digital strategy. It provided the company with a valuable, proprietary platform to monetize its vast library of unscripted programming and local news content via digital advertising. Most importantly, it proved that Fox could compete in the streaming era by offering a free, ad-supported alternative, thereby protecting its core advertising revenue model from the existential threat of secular pay-TV decline while simultaneously avoiding the ruinous economics of the premium streaming wars. By eschewing the costly pursuit of premium subscription streaming subscribers, Fox effectively insulated its balance sheet from the severe financial pressures currently plaguing its broader media competitors. Tubi continues to serve as a critical growth engine for the corporation, seamlessly integrating with its existing national broadcast networks and localized affiliate stations to offer advertisers reach across both traditional and digital video markets.
Outcome
The acquisition proved to be a masterstroke of corporate strategy. While rival media conglomerates burned billions of dollars attempting to build premium, subscription-based streaming services (SVOD) to compete with Netflix, Fox utilized Tubi's free model to rapidly scale its user base without incurring original content production costs. Tubi is now a centerpiece of the Tubi Media Group, operating profitably and consistently drawing over 100 million monthly active users.