how does tubi make money

How Does Tubi Make Money? Tubi’s Business Model Explained

There’s literally no one who doesn’t like free stuff. Considering that, think about a service that lets you watch countless hours of movies and TV shows for free — that’s a steal, right?

While there are numerous subscription-based OTT services available, a free one that offers thousands of hours of material is undoubtedly a godsend.

Okay, okay, enough of the buildup, before we reveal the platform, drumroll please: the platform offering all of the above is Tubi TV, an American OTT content provider that has been winning the hearts (and getting blessings) of millions of viewers for the past 8 years!

How Does Tubi Work?

Tubi is a free streaming service that offers access to more than 40,000 movies, TV shows, and live channels like NBC, FOX news, and Cox Media Group. And when we say “free,” we mean “free,” with no strings attached. There is no upfront or recurring cost, and no paywalls that restrict access to certain content.

As an ad-supported streaming platform, Tubi gives businesses a way to reach its staggering 51 million monthly active users and make their brand memorable in the process.

To begin watching videos on Tubi TV, users do not need to sign up for an account. Tubi TV provides immediate access via its website or directly from the Tubi App available for both Android and iOS in the Google Play Store or Apple Store respectively.

It is also compatible with 25 different streaming players, including Roku, Amazon Fire TV, Android TV, Samsung smart TV, and Apple TV.

The next obvious concern is, “But is it legal and safe?” You needn’t worry; it’s completely legal. There will be no security alerts, and you will not be redirected to somewhere else.

Because Tubi employs a savvy business model that incorporates advertisements and monetizes the material from its partners like MGM, Lionsgate, and Paramount, all of its content is legally free for the viewers.

Before being acquired by FOX Entertainment, one of the key things that placed Tubi apart from other giant streaming services like Netflix and Amazon was the lack of its own Tubi original content.

However, since being acquired by Fox Entertainment, it has created more than 60 hours of its own original programming and is rapidly moving toward releasing more!

Currently, the Tubi TV app is available in the US, Mexico, Canada, Australia, and New Zealand. Additionally, the firm intends to broaden its service offering into new markets, ready to give a stiffer competition to its rivals!

How Does Tubi Make Money

Tubi makes money through one major revenue stream, that is, in-video advertising and commercials that appear while streaming any content on the site or while switching between videos.

The innovative ad-running business strategy generated an astounding $650 million in 2022, demonstrating that Tubi TV has done it right despite having just one revenue stream!

Brands can advertise their products and grow their consumer base by using Tubi Ads to build a strong brand image among platform users. Remember that these advertisements cannot be skipped, therefore they will undoubtedly grab the audience’s attention.

Tubi TV over the years has attracted major advertisers such as Paramount, Unilever, Nationwide, Pizza Hut, and Amazon, among many others, showing how powerful its ad-dependent business model is!

Now, how exactly does this revenue model work?

According to a Nielsen study, the vast majority of millennials, roughly 75% of those between the ages of 18 and 34, are fine with sitting through commercials as long as the content is free” When it comes to generating revenue, Tubi has made the best possible use of this fact!

Advertisements on Tubi TV air every 12–15 minutes with only 3-5 ads per pod, totaling about 4-6 minutes per hour.

Source: Tubi’s official website

This is significantly less than what you’d see on a standard cable channel’s TV ad, which typically broadcasts between 11 to 15 minutes of advertising every hour.

Revenue, Funding and Valuation

Tubi TV has proven how efficient and accurate its business model is even with just a single, dominant revenue source, which is advertising.

According to Statista, Tubi brought in about 150 million dollars in advertising revenue in 2020. This number increased to $380 million in 2021 and $650 million in 2022, showing the company’s overall revenue’s remarkable upward trend.

It is projected that Fox corporation subsidiary Tubi TV will break into the billion-dollar revenue market by 2023, and make almost double its current level of earnings!

Over the past eight years, Tubi has amassed a massive user base, increased its revenue, and won the confidence of investors using a variety of strategies. Across its 6 funding rounds, it has raised a staggering $26 million, with the latest funding being raised on Dec 23, 2019, from a Series D round.

Source: Crunchbase

Tubi TV was originally valued at $29.59M in August 2015, but in less than 5 years it had grown to become one of the major over-the-top streaming platforms, attracting the attention of Fox Corporation, who acquired it for an astounding $440 million in 2020, representing a 1300% increase in its overall valuation!

History Of Tubi TV

The inception of Tubi dates back to 2014 when it was founded by current Tubi CEO Farhad Massoudi and Thomas Ahn Hicks in San Francisco.

After gaining popularity in the United States after its initial launch as a free streaming service, it further expanded to Canada and Australia in 2015 and 2019 respectively.

In May 2017, Tubi made its foray into the world of investing, raising $20 million in funds from Jump Capital, Danhua Capital, Cota Capital, and Foundation Capital.

Since its inception, Tubi TV has never let its audience down and has consistently produced an upward trajectory in its growth graph.

It reached a significant milestone in 2019 when it hit 20 million monthly active users, and that number has now risen to an astounding 51 million with a record-breaking 3.6 billion hours of watch time on the platform!

In 2019, Tubi launched Tubi Kids, a dedicated hub for children-centric content, which is available on the Roku channel (a streaming device) and other supported devices — making Tubi a much-loved platform not only for millennials but also for children!

Due to such exceptional performance in the OTT sector, Fox Corporation acquired Tubi in April 2020 for a whopping $440 million, giving it an even stronger brand name!

In the most current headlines, in August 2022, Tubi debuted in Costa Rica, Ecuador, El Salvador, Guatemala, and Panama, indicating that it is well on its way to surpassing its rivals.

Also Read: How Many Downloads Does Fortnite Have?

Competitors of Tubi TV

Tubi TV confronts serious daily competition from the many other OTT services like Pluto TV, Peacock TV, Sling TV, Crackle, Hulu, Youtube TV, IMDb TV, Disney Plus, Amazon Prime Video, among many others. Here you can find paid platforms, free ones, and even ones with a hybrid freemium/premium pricing structure.

Let’s take a deeper look at two of Tubi TV’s key rivals:

#1 — Pluto TV

Paramount Streaming, a subsidiary of Paramount Global, owns and operates Pluto TV, an ad-supported free streaming service.

Currently, Pluto TV has partnered up with over 70 firms offering more than 250 channels and 100,000 unique hours of content, making it a potential rival of Tubi TV!

As of 2022, the company has reached a total of 64 million monthly active users and has exceeded $1 billion in total ad revenue for the fiscal year 2021!

Also Read: How Does Pluto TV Make Money?

#2 — Peacock TV

Another player in the market giving tough competition to Tubi TV is Peacock TV, an American OTT video streaming service owned by NBCUniversal.

With Peacock TV, you can watch movies and TV series on demand without spending a dime thanks to the service’s freemium business strategy. However, it also provides paid plans like Peacock Premium and Premium Plus where subscribers have access to even more exclusive content.This billion-dollar firm now has over 28 million active monthly accounts and 13 million paying customers.

FAQS

Q1. How Is Tubi Funded?

Ad revenue is the main source of income for Tubi. Brands can use the platform to run ads in exchange for a fee.

Advertisements on Tubi TV air every 12–15 minutes with only 3-5 ads per pod, totaling about 4-6 minutes per hour.

Although the precise amount that Tubi TV charges its advertisers is still unknown, the company’s multi-million dollar revenue data reveals that its business model is making a ton of cash!

Q2. Is Tubi Really Free?

Absolutely, positively, yes!

Tubi is an American over-the-top video content platform and ad-supported streaming service that offers over 40,000 movies and TV shows for free to its viewers. You don’t need to be concerned in the slightest about content piracy because it is all lawfully accessible!

With content from over 250 partners like Disney, Warner Bros, Studio 100, Lionsgate, Paramount, and MGM, it boasts a library of over 40,000 movies, shows, and live TV channels that are legally available for its users!

Q3. What Is The Downside Of Tubi?

Things that are offered for free cannot always be perfect, thus here are a few downsides of Tubi:
#1 — Resolution: The fact that 720p is the highest resolution that Tubi is capable of streaming contributes to an overall poor-quality viewing experience. When seen on large screens, the image quality is not particularly pleasing to the eye.

#2 — Ads: There’s no way to skip advertising while watching a free movie or television show on the site, so be prepared to sit through them.

#3 — Content: Despite having over 40,000 content pieces, viewers have complained that the content feels a little “out of date” and that the platform’s originals aren’t very compelling.

How crucial a good revenue strategy can be is seen in Tubi TV’s ability to dominate the industry despite using a completely free business model!

With such a clever business model, we can surely hope that Tubi TV can get past its minor drawbacks and top the rankings to become the best OTT platform available, converting millions of people into avid content consumers!

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