Pete Davidson attends the TUBI “The Freak Brothers” event at Fred Segal on December 6, 2021 in Los Angeles, California.
Kevin Winter | Getty Images
Fox CorpBid . on the ad-supported free streaming service Tubi seems to be paying off for the company.
The company reported first-quarter earnings on Tuesday, noting that Tubi helped boost its ad revenue. The service offers on-demand movies and TV shows, as well as channels that play the traditional pay-TV format.
“In a quarter in which digital ad revenue came under pressure, Tubi delivered an outstanding revenue growth of almost 30%.” $165 million, said Fox CEO Lachlan Murdoch.
Fox said its ad revenue for the quarter was also boosted by political ads leading up to the midterms. In general, revenue for this period increased by 5% compared to last year and amounted to $3.19 billion.
During a call with investors, Murdoch said Tubi’s revenue surpassed Fox Entertainment’s advertising revenue for the first time “significantly.” The reason for this, Murdoch said, was a 50 percent increase in total watch time, marking Tubi’s highest quarterly watch time ever, at 1.3 billion hours.
Tubi’s ad revenue increase comes as Fox’s linear television networks have been hit by cord cutting and as many fear a downturn in the advertising market due to economic headwinds and a potential recession.
Fox is among media companies that have acquired a free streaming service in recent years to boost ad revenue as the streaming wars began with subscription services such as Netflix and Disney+ of the Walt Disney Co.
Fox bought Tubi in 2020 for an estimated valuation of $490 million. Comcast Corp. acquired Xumo the same year for an undisclosed amount, while Paramount Global acquired Pluto, Tubi’s main competitor, for $340 million in 2019.
Paramount has a premium streaming service, Paramount+, which includes ad-free options and cheaper ad-supported options. But in recent quarters, the company has said that Pluto’s audience continues to grow, contributing to overall streaming growth. The company reports earnings on Wednesday.
Media companies are struggling to add more paying subscribers to their streaming platforms with Netflix, Disney+ and Warner Bros. DiscoveryHBO Max invests heavily in content budgets. More recently, they have also turned to cheaper, ad-supported subscription options.
Meanwhile, services like Tubi and Pluto are quietly generating ad revenue for media companies.
Fox management said Tubi’s revenue will continue to grow in the next quarter, adding that the company invested about $50 million in the streamer during the quarter.
Murdoch called the investment “very modest” compared to premium subscription streaming services. He added that the company will continue to invest in Tubi, seeing it as a “safe investment” that could win in the ad-supported free streaming category.
Disclosure: CNBC is owned by Comcast Corp.