Fox Corporation has announced the acquisition of advertising-supported video on-demand (AVoD) service, Tubi. The US media company said it would pay $440 million in cash, funded from the sale of its 5% stake in digital media company Roku.
Tubi is currently available in the US, Canada and Australia, and has plans to launch in the UK, the rest of Europe and Mexico in 2020. The service features over 20,000 titles and 56,000 hours of content and is available on more than 25 digital platforms in the US including Roku boxes, Amazon FireTV, and Comcast Xfinity. With the new ownership, Tubi will continue to run as an independent service.
Fox Corp is a spin-off from 21st Century Fox after Walt Disney acquired most of its assets in March last year. The company's primary activities are the Fox-branded broadcasting and cable channels in the US. The purchase of Tubi is expected to be completed by the end of June.
The acquisition is another sign of the growing interest in AVoD from TV companies. It follows Viacom’s acquisition of Pluto TV in March 2019, Comcast’s acquisition of Xumo in February 2020, Disney’s full ownership of Hulu, and NBCU’s Peacock and AT&T’s HBO Max launching later this year. By selling off its stake in Roku, Fox has chosen to eliminate any conflict of interest while gaining full control of Tubi. This will give it access to Tubi’s technological know-how, including algorithms helping users personalise on-demand content from its vast catalogue and helping advertisers to reach the right audience at scale.
With the acquisition, Fox immediately gains millions of users in the fast-growing direct-to-consumer business. Tubi’s monthly active users grew 25% from 20 million in June 2019 to 25 million in December 2019. It has a solid international expansion plan set for 2020 and has established partnerships with local broadcasters, content owners and device makers. Prior to its launch in Mexico later this 2020, it has agreed a content and advertising sales partnership with Mexican broadcaster TV Azteca and via a deal with Hisense, Tubi will be pre-installed within the manufacturer's connected TV devices and prominently placed on its Vidaa TV homepage.
To Tubi, the ownership by Fox means the ability to further expand the quality and quantity of its programming going forward. Tubi’s content strategy had always focused on licensed content and it will continue to do so, according to Fox. Existing content partners include Lionsgate and MGM.
As the AVoD consolidation continues, we expect to see greater competition for audience and digital advertising dollars among TV network-backed AVoD players in the US including Tubi, Pluto TV, Hulu, Xumo and Peacock. Without the backing of TV networks, it will be critical for Roku Channel to maintain a compelling channel and content line-up.