Fox Corporation is to buy ad-supported video (AVoD) service Tubi for $440m. Fox already has extensive ad-funded broadcast TV assets, so what is it getting with the Tubi acquisition?

Tubi is one of the largest AVoD services in the US market, at least from a catalogue perspective. By mid-February 2020 it offered consumers over 20,000 TV series and movies, representing close to 60,000 content hours. This has increased by 16% over the prior four months alone. To place this catalogue size in context, Netflix and Hulu each offered less than 40,000 hours of content to US households in February 2020, and newer services like Disney+ offered less than 3,000 hours.

Tubi’s catalogue is a little older than that of many SVoD players, with the average title first released in 2006, but the sheer size of its catalogue hides the fact that Tubi has a diverse core of well-rated library movies and series, including titles from the Star Trek, Fast & Furious and Stargate franchises, UK-originated comedies such as Inbetweeners and Shameless, and early seasons of US shows such as Scandal and Hell’s Kitchen.

Library size matters more for AVoD services than for SVoD providers. SVoD services can sustain large paying subscriber bases using just a handful of new tentpole tiles. AVoD services, in order to make money, require their users to view content and the accompanying commercials. So while quality, recency and attractiveness of content are all still crucial features in driving consumption among AVoD users, volume also has its own value. Tubi’s large and genre-diverse catalogue is therefore well suited to ongoing monetisation of users.

Ampere’s polling indicates that Tubi monthly active users (MAUs) themselves represented a little less than 5% of US Internet users in February 2020, up on 3% of Internet users just six months prior. Users are typically slightly older than the average US consumer, and older than SVoD users, but they are more likely to be cord-cutters or cord-nevers – and thus harder for advertisers to reach via broadcast channels such as those in Fox’s existing portfolio.

As Tubi turns to international markets, having already launched in Canada and Australia, Fox’s backing will help it develop local ad sales initiatives and support content investment. Tubi itself offers Fox a new opportunity to diversify its now-diminished content distribution portfolio and reach some of those consumers it may have lost from its broadcast channels.