Free streaming service Tubi rivals major players in terms of viewership

Tubi achieved profitability this year by doing what other streaming services are trying to do: attract younger audiences who are willing to watch ads.

He Fox CorporationThe free streaming platform has long been among a sort of second tier of streaming services alongside less popular, lower-budget offerings like Pluto and The Roku Channel. But the free service is gaining traction and finding its place in conversations with big players.

In November, Tubi accounted for 2.1% of total streaming minutes in The Gauge, Nielsen's monthly analysis of viewing trends, ahead of Peacock and NBCUniversal. Warner Bros. Discovery HBO max from google YouTube ranks first in audience tracking.

“Our fans come in and act like [subscription streaming] spectators. The only difference is that they don't pay for it,” Tubi marketing director Nicole Parlapiano said in an interview.

Netflix The dominance of streaming has led many media companies to chase the same success, spending billions of dollars on original content to attract subscribers and strive for profitability.

In response, the cost of streaming has risen, and nearly all subscription platforms have instituted multiple price increases in recent years and pushed consumers toward cheaper, ad-supported options. The crackdown on password sharing by some of the biggest players has also shaken the space.

“People used to cut the cord, now they're canceling subscriptions. And that's driving more consumption toward free streaming? Absolutely,” Tubi chief content officer Adam Lewinson told CNBC.

Tubi said it has more than 100 million monthly active users and 1 billion hours of streamed content per month. For comparison, Netflix reported more than 300 million subscribers at the end of 2024, the last time it reported the metric, while Disney+ reported 131 million subscribers at the end of September.

Nearly 60% of Tubi's audience is made up of millennials or members of Generation Z, and almost half are multicultural, Tubi said, citing an MRI-Simmons Cord Evolution study of its audience.

Tubi grows its library by licensing movies and TV series, some popular and others niche. The platform produces original content, although on a smaller scale than its competitors. It also took advantage of Fox's sports arsenal, streaming two NFL games this year on Tubi, notably the Super Bowl in February and a Thanksgiving Day game last month.

In total, Tubi has more than 300,000 titles on its platform.

In October, Fox reported that Tubi had reached profitability for the first time for the fiscal quarter ending Sept. 30, with Fox CEO Lachlan Murdoch adding that it reached that milestone “earlier than expected.” Tubi reported 27% revenue growth for the quarter, driven by an 18% increase in total viewing time.

Murdoch said at the time that the hope was for Tubi to continue its trajectory so it could become “a significant contributor” to earnings in the near term.

The growth is validation for Fox, which took a different tack to the streaming game than its media peers. Its shares are up more than 40% this year, while other media stocks haven't fared as well amid a sea of ​​uncertainty.

The company transferred its entertainment assets to Disney in 2019, and its television business (the Fox broadcast network and cable networks such as Fox News) consists primarily of news and sports. In 2020, the media company acquired Tubi for $440 million.

Since then, Tubi had been Fox's main answer to streaming until recently, when the company launched Fox One, a direct-to-consumer streaming service of all Fox content for $19.99 a month. Murdoch has emphasized that there are no plans for Fox One to produce original or exclusive content, leaving Tubi to shine for a digital and cost-conscious audience.

Paige Bulera, a 23-year-old from Buffalo, New York, said she doesn't believe in paying for disappointment. That is why Tubi emerged as the winner among all its streaming apps.

Bulera said he watches movies more frequently than the average person and uses his sister's login details for almost all the major streaming services. But with each subsequent price increase, you find less satisfaction with your investment.

“Not only are they going up in price, but it seems like with every price increase things are being lost,” Bulera told CNBC. “It's like now you can't share accounts with people on Netflix, or even if the price goes up, there will still be ads.”

His film catalog leans heavily towards horror. Tubi said the platform has the largest collection of horror content with 9,000 titles, while also offering fan favorites spanning genres like “Coraline,” “The Wolf of Wall Street” and “Tom and Jerry.”

“With Tubi, it's completely free – you know you're getting ads, but it's promoted in a way where you can watch old movies, new movies or Tubi originals, so I'm a big fan of the platform, mainly due to the fact that it's cost-effective,” Bulera said.

A recent report from MoffettNathanson notes that streaming participation remains strong on YouTube, followed by free ad-supported platforms including FAST channels like Tubi, Paramount Skydance Pluto and from roku The Roku Channel.

Tubi executives say the platform often gets caught up in the same conversation as platforms like Pluto because it offers channels in a guide format that mirrors the traditional linear model. However, given that almost all of its viewership is on-demand (meaning viewers select movies and series from the library rather than tuning into a pre-programmed channel), Tubi argues that it should swim in the same group as subscription services like Netflix and Disney+.

“Ninety-five percent of people come with the intention of seeing what they want to see and they gravitate toward it. They are not passive viewers,” said Tubi's Parlapiano.

Executives say the selection process makes Tubi viewers more inclined to watch ads than those who tune in to other free, ad-supported channels for a more relaxed experience, or just to have some background. That's a strong selling point for advertisers.

“We are 100% ad-supported, which other streamers are not. Yes, they have levels of advertising, but it's not clear on each platform how large those levels are and how much viewing occurs in an ad-supported environment,” Parlapiano said.

On Fox's most recent earnings conference call, Chief Financial Officer Steve Tomsic said the company's overall TV advertising revenue increased 6%, driven primarily by the growth of Tubi.

Since 58% of its viewers are young, Tubi has put a lot of work into attracting younger generations, according to company executives.

In June, Tubi launched Tubi for Creators, part of the company's broader push to bring content creators to Hollywood.

“The idea behind this is to give creators a path into Hollywood that really allows them to maintain the authenticity that made them popular in the first place and maintain a lot of creative control,” said Rich Bloom, Tubi's director for Creators. “We launched with six creators and around 500 episodes of content, and now we have over 100 creators and over 10,000 episodes of content.”

Tubi has signed deals with well-known YouTube artists to add their existing episodes to the platform, such as Dan and Riya's “Beverly Valley High” and FunnyMike's “Mr. Creepy Eyes” series. It has also signed deals with independent filmmakers through Kickstarter-funded projects.

Bloom said Tubi has seen that the category is attracting new, younger audiences, and that “the retention rate of those viewers is actually better than our new viewers overall.”

Tubi's Lewinson said the platform has been particularly successful with young adult films, such as “Sidelined” and “Sidelined 2,” starring TikTok star Noah Beck. The franchise alone has drawn nearly 20 million viewers, and the average age of new viewers watching the sequel is just 21, Lewinson added.

“We're really showing that we can bring young viewers to a long-form streaming platform,” he said. “There's a perception that they're only interested in short form, which isn't entirely accurate. As long as you have content relevant to their fandom, they'll come to Tubi.”

Generation Z also leans toward nostalgia, with older shows like “Columbo” and “Murder, She Wrote” also popular on Tubi.

Tubi executives point to its growing audience of Gen Z and millennials as another selling point for advertisers.

“My acquisitions team can go out and acquire anything we can find, but we're finding that as we produce these types of stories, we're really attracting those viewers,” Lewinson said. “They'll come to see 'Sidelined,' but then we'll follow their journey to see what else they're watching on the platform, and we'll make sure we have plenty of those categories for viewers to watch.”

Disclosure: Comcast is the parent company of NBCUniversal, which owns CNBC. Versant would become the new parent company of CNBC following Comcast's planned spinoff of Versant.