In the world of streaming, the paid-subscriber model is seeing competition from free-to-the-consumer ad-supported options such as Tubi TV, the largest free ad-supported streaming network. Tubi Inc.'s founder and CEO, Farhad Massoudi, confirms Tubi has over 20 million installs and is luring millions of monthly active users with the largest online library of free, premium content. In addition, Tubi is the only free streaming service with a personalized recommendation engine.
Tubi TV’s ever-expanding massive library contains a wide range of Oscar-winning films and Emmy-winning TV shows spanning more than 40 genre categories from comedy, drama, family and children’s programming, classics, horror and niche content such as Korean dramas, anime and British TV that includes over 7,500 TV shows and movies (more than 50,000 videos).
As consumer viewing habits have shifted from linear viewing to on-demand streaming, content discovery has become a huge challenge in the VOD space. Tubi stands out for the December launch of its Content Personalization Engine. With this AI technology, Tubi reprograms a customized library on the fly tailored specifically for each user, thus creating a personalized VOD service. Also referred to as Machine Learning, the ability to program and personalize its on-demand content to find out what viewers want, in addition to when and where they want it, has catapulted Tubi to the front of the line in the AVOD (Advertiser-based Video-On-Demand) space. In addition, Tubi has launched an on-boarding process designed to fast-track a new user into a personalized experience to find content easier. And, the more a viewer watches Tubi, the more accurate the recommendation becomes due to personalization run entirely by Tubi’s proprietary algorithms, which were built on years of technological development using deep learning to process a massive dataset of user profiles, behaviors and content metadata, including third-party data sources.
“The algorithm learns what you like and pulls that information, letting you have a huge library of content tailored specifically for you,” explains Tubi Chief Content Officer, Adam Lewinson. “Machine Learning is pushing what the consumer wants. Instead of getting say one program on a daily basis, there are millions of different variations per user daily.”
In the first few days following the launch, Tubi’s proprietary Content Personalization Engine increased viewership (time spent on the platform) up to 20%. Given that the algorithm increases personalization the more a consumer watches Tubi, the company expects this to greatly impact retention and engagement over time.
“If you’re not leveraging Machine Learning, you don’t have a future,” says Massoudi. “The era of human programming is over. This technology combined with our massive content library and user usage data makes our product offering exceptionally unique to both our studio and network partners and most importantly, our viewers.”
Massoudi confirms Tubi will never develop original content or charge for its service. “You need so much capital to create original content,” he says, referencing Netflix’s plans to put $8 billion this year into its vast library of original content. “Their focus on original content is in tandem with their shrinking library. This makes Tubi TV much more valuable as we’re bringing our massive library to the table. We have a lot of iconic films that are not available on Netflix. Their whole point is to put their original content behind a wall and convince consumers to sign up and pay for it. Netflix is becoming HBO. There clearly needs to be a free service, either as a complementary to Netflix or as a stand-alone to watch premium content. Tubi is the No. 1 free streaming service and it’s very much like a Netflix experience.”
Tubi’s revenue stream comes from advertisers that benefit from Tubi’s targeted, measurable audience with long engagement times and a positive brand attribution environment. Since 2014, overall online video ad sales have increased by 20% annually with the online video ad market projected to have double-digit growth by 2020. And, eMarketer estimates that total digital ad spending in the U.S. this year will grow 12.9% to $93.75 billion with digital representing 43.6% of all U.S. ad spending and OTT usage in the U.S. will grow 2.7% this year reaching 198.6 million viewers. Spending on digital media worldwide will reach $266 billion by the end of this year and approach $375.8 billion in 2021, driven largely by advertiser investments in mobile formats.
Viewers stream for free, however, each 30 minutes of content contains four-to-five minutes of commercials, including during movies. According to Nielsen, 75% of Tubi TV’s core audience of millennials report that ads don’t bother them as long as the content is free.
Massoudi founded and started the company in 2011 and in 2014, Tubi TV launched as a streaming service with more than 20,000 videos. Tubi has more than 200 content partners, including Viacom’s Paramount Pictures. To date, Tubi has raised upwards of $35 million in funding to help grow and expand the company, including Series C funding of $20 million in May. The funding came from four venture capital firms led by Jump Capital. Cota Capital led the company’s Series B round, with additional investors. The company continues to grow exponentially year-on-year, with its revenue doubling every year for the past three years as it works on technologies to evolve entertainment with the help of principal investors, including Foundation Capital (led Series A funding) and Streamlined Ventures, in addition to strategic investors such as MGM Studios, Lionsgate and Stanford University. The San Francisco-based tech company, formerly known as adRise, consists of 75 employees with additional offices in New York, Los Angeles and Beijing.
"AVOD services have been neglected by an industry that was trying to protect linear TV and saw SVOD (Subscriber-based Video-On-Demand) as incremental", explains Media and Tech Analyst at BTIG, Richard Greenfield. “As the linear TV model collapses, driven by SVOD, content owners will need to find new (or rather, old) ways of making more money by boosting content supply to AVOD. As the content on ad-supported premium content destinations such as Tubi improves, consumers will follow. This will be aided by technology that can better target ads enabling a far lighter ad load relative to linear television.”
Massoudi is offering an identical experience to the traditional TV-commercial experience, while also reaching cord-cutters. Commercials aren’t preventing viewers from signing up. In fact, Tubi TV has more monthly active users than HBO Now and CBS All Access combined. Tubi is ranked as the No. 1 app for movie and TV streaming services and is also ranked the No. 1 free streaming app for both Android and iOS devices.
Ville Salminen, owner of streaming news site Cordcutting.com and Netflix tracking site Flixable, points to Crackle, Tubi TV and Popcornflix, which have emerged as the leading AVOD services. “Although Tubi is the newest entrant, it has quickly gained popularity and, according to Amazon’s Alexa rankings, has enjoyed a steady climb in the number of viewers during the past year.”
Though Tubi has the largest library of the three, Salminen adds that the size of the library isn’t everything. “What about quality? When Tubi TV launched, Variety commented that its library primarily consisted of movies and TV shows no one had heard of. While Tubi TV still offers plenty of little-known indie and international content, its library also includes cult movies from Battle Royale to Mulholland Drive and critical successes like The Pianist.”
Tubi TV embraces the reality that for many, it’s a second option to the majors like Netflix, Hulu and Amazon. Rather than seeing this as an obstacle, Tubi welcomes it.
Tubi can be viewed on Android and iOS mobile devices and on OTT devices such as Roku, Apple TV, Chromecast, Xbox 360, Xbox One, Sony, PlayStation 4, Samsung, Amazon Fire TV and via its website.
