Earlier this month, Disney’s Hulu began to rebrand itself as the ‘starting point’ in the complicated world of over-the-top (OTT) media.
Hulu enables viewers to access TV on their own terms—with ads, without ads, with live TV, etc. But when it comes to the ad-supported tier, Hulu has competitors coming for them.
Fox purchased Tubi just over a year ago and expects its ad revenue to soar in the next few years. Why is it betting big on Tubi? And how does Fox’s linear TV advertising stack up against Hulu’s?
Tubi’s leaning on its tech stack as a differentiator
This year, Fox CEO Lachlan Murdoch expects Tubi revenues to double and exceed $300 million in revenue.
By 2023 that number is expected to grow rapidly. Analysts predict that Tubi will bring in $1 billion in ad sales. Not only that, but MoffettNathanson analyst Robert Fishman pointed out that roughly 80% of Tubi viewers can’t be reached using the top 25 cable TV networks, making it enticing for advertisers.
Tubi’s audience skews younger than Hulu, Paramount+, or Peacock. Half of Tubi’s monthly active users are less than 35 years old. And many users don’t watch additional ad-supported video-on-demand (AVOD) content in their TV viewing “diet.”
Murdoch pointed to their tech stack as another major draw for advertisers. Tubi’s new ad frequency management tool reduces ad repetition significantly—enabling brands to expand their reach with the same ad buy.
“Tubi’s tech stack, in general, will separate Tubi from lesser AVOD offerings for years to come,” explained Murdoch.
Fox is approaching Tubi as the “broadening of broadcast.” Over the next couple years, Fox linear TV and Tubi will become even more integrated, making ad purchasing more seamless for buyers.
Tubi was launched nearly seven years ago, but didn’t have Fox’s resources until last year. That being said, Fox and Tubi are just at the beginning stages of integrating their content and technology.
Hulu, on the other hand, works with 65+ channels and has been leading the AVOD competition for several years.
It’s not quite an apples to apples comparison to compare Hulu and Tubi. For this reason, we’re comparing Hulu advertisers and Fox linear TV advertisers.
In January and February of 2021, 55% of Hulu advertisers also appeared on Fox.
Of the 55% overlap, Pharma, Entertainment, and Retail are the three largest categories. The entertainment category made up 15% of that overlap, which includes advertising for streaming services.
Interestingly, Hulu allows competitors to buy ad spots on their platform (except Netflix). In the first two months of the year, we observed small campaigns placed by all the services, including Tubi. Though they were on Hulu, these ad buys didn’t run on original programming.
Similarly, Fox programming doesn’t just allow ads for Tubi. Discovery+ ran ads on Fox programming.
As AVOD services become core pillars of traditional broadcasts’ revenue, we’ll see shifts in where advertisers go. Many advertisers want to make the jump to OTT because of the targeting features and ad frequency management tools, but not all AVOD services have invested the same amount of dollars into ad management technology.
Tubi is betting big on its technology. We’ll see how that shakes up AVOD ad dollars.
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