- Fox Corp. said Tubi, its free ad-supported streaming service, had revenue growth of nearly 30% during its fiscal first quarter.
- Fox acquired Tubi in 2020 and said it invested $50 million in the service in the last quarter.
- Tubi had its highest viewing time last quarter at 1.3 billion hours.
Fox Corp.’s bet on its free, ad-supported streaming service Tubi appears to be paying off for the company.
On Tuesday, the company reported earnings for its first fiscal quarter, noting that Tubi helped boost ad revenue. The service offers on-demand movies and TV series, as well as channels that recreate the traditional pay-TV format.
“In a quarter when digital ad revenue appeared to be under pressure, Tubi posted unprecedented revenue growth of nearly 30%,” to approx. $165 million, Fox CEO Lachlan Murdoch said.
Fox said ad revenue in the quarter was also driven by political ads leading up to the midterm elections. Overall, revenue for the period rose 5% from a year ago to $3.19 billion.
On a call with investors, Murdoch said that Tubi’s revenue for the first time exceeded the ad revenue generated by Fox Entertainment “in a meaningful way.” This was a 50% increase in total viewing time, and marked Tubi’s highest quarterly viewership ever at 1.3 billion hours, Murdoch said.
The increase in ad revenue from Tubi comes as Fox’s linear TV network has been hurt by cord-cutting and many fear a slowdown in the ad market due to economic headwinds and a potential recession.
Fox is among the media companies that have bought a free streaming service in recent years to boost ad revenue as the streaming wars heated up with subscription services like Netflix and Walt Disney Co.’s Disney+.
Fox acquired Tubi in 2020 for an estimated $490 million. Comcast Corp. acquired Xumo the same year for an undisclosed amount, while Paramount Global acquired Pluto, a main competitor of Tubi, for $340 million in 2019.
Paramount has its premium streaming service Paramount+, which includes ad-free and cheaper ad-supported options. But it has said in recent quarters that Pluto’s viewership continues to rise and boost overall streaming growth. The company reports results on Wednesday.
Media companies have been scrambling to add more paying subscribers to their streaming platforms, with Netflix, Disney+ and Warner Bros. Discovery’s HBO Max investing heavily in content budgets. Recently, they have also turned to cheaper ad-supported subscription options.
Meanwhile, services like Tubi and Pluto have been quietly generating ad revenue for media companies.
Fox management said Tubi was on track to continue growing revenue next quarter, adding that the company invested roughly $50 million in the streamer during the quarter.
Murdoch called the investment “very modest” compared to premium subscription streaming services. He added that the company will continue to invest in Tubi, which it sees as a “safe investment” that has the potential to become the winner in the free, ad-supported streaming category.
Disclosure: CNBC is owned by Comcast Corp.