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News Analysis 8 Jul 2020 - 3 min read

$20 million ad business in three years: Foxtel Media flags AVOD player Tubi will take on BVOD rivals with low ad loads

By Josh McDonnell - Senior Writer

Launched locally in August 2019, advertising-supported video on-demand service Tubi has quietly been developing a strategy to take on BVOD rivals 9Now, 7Plus and 10Play. After landing an ad sales partnership with Foxtel Media, Tubi CEO Farhad Massoudi and Foxtel Media boss Mark Frain enter the already crowded streaming wars with expectations the platform will be a $20m business by 2023. But quality content will be the challenge.


What you need to know:
  • Tubi had a soft launch in Australia in August last year, with a catalogue of close to 10,000 titles - mostly second tier - now available locally.
  • In March, Tubi was acquired by News Corp's Fox for $US440m, opening the door for alignment between the two businesses in Australia.
  • Foxtel Media CEO Mark Frain expects the business to write $20m in ad revenue over the next three years.
  • But it further fragments the broadcast sector's digital portfolio as advertisers and agencies look for scale and buying ease against the tech duopoly   
  • The new alliance aims to become a significant competitor to the major free-to-air networks' BVOD offerings.
  • Tubi CEO Farhad Massoudi says the platform will still act as a complimentary service for subscription based models such as Foxtel, Netflix and Stan.
  • In April, Tubi's US subscriber base of 25 million recorded over 200 million hours of viewing for the month - doubling year-on-year.
  • The platform now has lofty goals to bring more major Hollywood titles to the local offering, while also bolstering its library with Australian content here and in international markets.
  • The move by Tubi to nab more ad-supported streaming dollars follows commentary at the Future of TV Advertising forum earlier this year that called for a united ad-supported model from the major networks as more players entered the market - broadcasters' combined are the second biggest streaming platform in Australia 


Tubi, the local streaming newbie

The first major international AVOD service to reach Australia's shores, US-based Tubi has been building out its content offering and ad sales strategy in relative anonymity since August last year.

The soft local entry launched with a catalogue of now just under 10,000 titles and an international audience obsessed with Australian dramas like McLeod's Daughters  is a start but advertising-based video on-demand (AVOD) streaming service Tubi has a lot of work to do.

Tubi would not reveal numbers specific to Australia but claimed that viewing time across Canada and Australia for 2019 grew 357%. In March the company was acquired by Fox.

As viewership continues to grow alongside an expanding library of film and TV, Tubi has tied up with Foxtel's ad sales arm, Foxtel Media.

As part of this deal, Foxtel Media will serve as the sole ad sales representative in Australia for Tubi through 2022.

Speaking to Mi3, Foxtel Media CEO Mark Frain says he expects the business to hit revenues of $20m over the next two or three years or the venture "hasn't delivered on its expectations".

Frain also says the AVOD platform would take on the likes of Seven, Nine and Ten's own broadcast video on demand (BVOD) platforms.

"If in the next 2-3 years, Tubi isn’t a $15-20m AVOD play, then we haven’t delivered. It should be a significant player in the market and stacking up against the likes of 10Play, 9Now and 7Plus," Frain says.

"One thing that Tubi and Foxtel media are 100 percent focused on together is the revenue outcomes, the product lives and dies by that commercial model."

Tubi CEO Farhad Massoudi told Mi3 the platform would compete heavily against some of the other ad-funded servcies that already exist locally but ultimately acted as a companion piece in the wider streaming market.

He says in the US while Tubi's content library is three times the size of subscription streaming giant Netflix, it primarily acts as an alternative site that houses "complimentary content".

"The Masked Singer is available on Tubi, as are blockbuster titles like Brad Pitt’s Fury, Dev Patel’s Lion, classic films including Momento, Donnie Darko, The Italian Job," Massoudi says.

"We go deep into all kinds of verticals and even niche content that is not necessarily well served by subscription services. That's our playbook in the US and the rest of world which has worked really well for us."

It also has high rating British comedies such as The IT Crowd and Peep Show.

However in Australia, the library of content still primarily houses second tier film and TV, while also providing access to classic films such as 1970s John Wayne westerns.

Frain says content will also be improved alongside the ad sales capabilities.

"There will be improvements in quality but I think as much of our strategy will be around volume of content for this market to deliver the revenue multiples that we're looking for," he says.

"As we grow the viewership and as we grow our revenue, we double down on titles and genres of the content that consumers want to watch in Australia."

Says Massoudi: "We wouldn't distract ourselves if we didn't think that that has a very meaningful potential, to be quite frank."

Adloads and managing marketing

One of the key areas for growth Massoudi sees for Tubi in Australia is around its adloads and shared approach to inventory with Foxtel Media.

"Tubi has the lowest ad load in the United States, four to six minutes an hour, we're bringing that to Australia market," he says.

"This is meant to be very user friendly, consumer friendly environment. And advertisers get to reach a much larger audience on premium content with premium advertising experience. So hopefully it's a win-win for everyone."

Frain says the Tubi deal is like opening a new "ad inventory war chest" which will compliment the existing offering across the entire Foxtel portfolio.

Over the past 12-months, Foxtel Media has been exploring alternative adload models, shortening the amount it runs during programming, offering six-second inventory and only running pre-roll on its streaming platform.

Frain believes this will provide greater alignment between how it takes Tubi to market and bundles it with existing products.

Foxtel will also bear some of the load for Tubi's marketing strategy in Australia.

"There is an enormous amount of potential to utilise Foxtel as a marketing platform for the product itself," Massoudi says. 

"While Tubi does well with its advertising and acquisition models across social media like Facebook and Instagram, couple that with the existing Fox-owned marketing assets and you’ll get a multiplier on top of that, which we expect will yield results pretty quickly."

Foxtel Media stated that while there are no initial plans to integrate Tubi into the Foxtel box offering, similar to what it's done with Netflix and SBS, it would "make sense" to seriously considering the option.

"Tubi is intuitive in terms of the machine learning capability. If you're a customer, you're going to get ongoing recommendations of the content you like," Frain says.

"So depending on the content deals that Tubi have done, we've got to replicate that with that part on the Foxtel platform and eventually push that content as part of our carousel."


AVOD rising: other players duke it out

Earlier this year, Guy Bisson of Ampere Research discussed the need for a greater AVOD evolution in Australia at the Future of TV Advertising forum.

He argued that the major television networks would be best suited to adopting a "Hulu-like" model over the next three years or lose footing to the likes of Netflix and other burgeoning streaming giants.

"What is the second-largest streaming platform in Australia? Number one, of course, is Netflix. Looking at it you might say it's Stan but I'm going to say no, it's not," Bisson says.

"It's a hypothetical platform that doesn't yet exist...each [broadcaster] BVOD platform has an average reach of 16% individually, but when combining those who watch two or more of those services you get a reach of 34%, meaning the FTA broadcasters are the second-biggest streaming platform in Australia [collectively]. Therein lies an opportunity for broadcasters."

But like publishers, and despite ThinkTV's claims of a united from, old-world habits die hard. There are ongoing rumblings of discord among broadcasters to align on trading and audience planning despite the ongoing march of the tech giants into the video and TV ad market.   

Speaking at the Future of TV Advertising conference this year, Tubi's VP of advertising partnerships, Tyler Fitch warned of an incoming AVOD avalanche in Australia.

He says Tubi will continue to make ground off the back of Netflix and other streaming players' push for original content, which will allow previously unattainable premium content to be bought by AVOD operators.

"The pureplay AVODs are more than happy to see the SVODs battle it out and spend billions of dollars creating the top 1% of content, because 99% of viewers are happy to watch content that Netflix had locked up [in longstanding] deals," Fitch says.

"We continue to be that extra avenue for people to monetise content - and it's only looking better as the fight for SVOD continues to get bloodier in the next six months."

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Josh McDonnell

Senior Writer

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