Fox Corporation's Tubi's foray into the UK market is a head-scratcher, but it's one to take seriously. | Business News

Tubi, the free, ad-supported streaming service owned by Rupert Murdoch's Fox Corporation, has launched in the UK.

Tubi promises UK viewers over 20,000 movies and TV episodes on demand, including content from every major Hollywood studio, and is the fastest-growing streaming service in the US, with around 80 million monthly active users. Tubi also describes itself as offering a “robust lineup” of exclusive original programming.

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A market that seems saturated

The service enters an increasingly competitive UK market, where the likes of Netflix, Amazon Prime Video, Disney+ and Apple TV are already competing fiercely.

Sky News' parent company, Sky, owns a streaming service called Now TV and also offers a service called Sky Stream, which allows customers to watch Netflix, Apple TV, Amazon Prime Video, Paramount+, Disney+, as well as Sky's original content, all in one place.

The traditional terrestrial TV broadcasters (BBC, ITV, Channel 4 and Channel 5) all have their own streaming platforms, and in April they teamed up to launch a new service called Freely, which will give viewers the option to watch both live TV and on-demand content, and is widely expected to replace the digital terrestrial TV service Freeview over time.

So Tubi's entry into the UK market came as a surprise to some.

As the market appears to be saturated and production costs rise, streamers are forced to either raise subscription prices or rely on a dwindling pool of advertisers.

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A competitor to be taken seriously

But competitors would do well to take the new challenger seriously, as Tubi has already taken a hard-line stance against many of its competitors in the United States.

“Tubi has been refining its approach to broad, free and enjoyable streaming in North America for the past decade and now is the perfect time to bring that approach to UK audiences,” said Anjali Sud, CEO of Tubi.

“We are launching the UK’s largest and most diverse content library, designed to give viewers everything from blockbusters to original stories and hidden gems.

“Most importantly, we’re committed to listening to what resonates with UK fans and giving them more and more of what they love.”

One of Fox's fastest growing businesses

Tubi, which Fox acquired for $440 million in 2020, is one of Fox’s fastest-growing businesses. Fox Chairman and CEO Lachlan Murdoch reportedly turned down a $2 billion offer for the business last year.

In May, it set a new all-time viewership record in the United States, drawing more viewers than Disney+, Peacock (owned by Comcast, Sky News' largest parent company), Max (the streaming service owned by Warner Bros. Discovery, formerly known as HBO Max), Paramount+, and free competitors like Roku and Pluto TV.

Among free, ad-based VOD services, only YouTube has come out ahead.

Why Brexit is happening in the UK

Tubi, which is currently available in the US, Canada, Mexico, Australia, New Zealand and several countries in Central America, has specific reasons for targeting the UK market.

The first is regulation. Today is not really a launch, but rather a relaunch, because Tubi was available in the UK and Europe until 2018, but had to pull out due to the EU’s General Data Protection Regulation (GDPR).

Now that the UK has left the EU, Tubi can return to the UK.

The second is the form of the market.

Targeting young people and ethnic minorities

Tubi believes that parts of the UK market, particularly younger generations and ethnic minorities, are underserved by existing streamers, particularly the big broadcasters like the BBC and ITV, which have traditionally targeted the masses.

“Similar to the U.S., there was a natural need to revert to the middle ground to focus on mass appeal, which is very difficult in a country with such a diverse mix of people with different tastes and perspectives,” Sood told industry publication Variety.

So, Tobey aims to “offer enjoyment beyond a single culture” and offer “a new realm of discovery, from Bollywood and Nollywood to arthouse cinema.”

The similarities between the U.S. and UK markets are a major reason Fox is confident Tubi can succeed in the UK.

As competition for subscribers intensifies in the U.S. and so-called “cord cutting” (cancelling a pay TV service or subscription channel) increases, Tubi is expected to benefit because it is free and appeals to so-called “cord nevers”—millennials who have never subscribed to satellite or cable TV but instead use online streaming services.

Image: Photo: Tubi

Fox's CFO Steve Tomsick told investors in May that this was particularly attractive to advertisers: “Sixty percent of Tubi's users are cord cutters or cord nevers… Tubi… serves advertisers outside of its ecosystem.

“And another thing about Tubi is that a lot of people confuse Tubi with some kind of passive high-speed channel. Tubi is just a channel that's spinning in the background in people's homes.

“That's not true. Ninety percent of Tubi consumption is VOD (video on demand), and it's really a progressive experience. People intentionally choose a title and watch it all the way through.”

Based on this, Tubi appears to be most aggressively targeting streamers who use ad-supported services to drive down subscription prices. Tubi’s big advantage for advertisers is its appeal to a younger, more racially diverse audience.

Both Netflix and Amazon Prime TV (the latter through a service called Freevee) offer cheaper subscription options for customers willing to tolerate ads.

Questions about content, competition and advertising

But questions remain.

Tubi launched more than a decade ago and was able to establish a strong presence in markets like the US, long before Warner Bros., Disney, Paramount and others launched their own streaming platforms. Here, it starts from a late start.

Another issue is how competitors react.

Amazon, in particular, has proven adept at undercutting competitors across a range of services, including TV advertising, which has caused Netflix headaches. Netflix’s ad-supported service is believed to have attracted fewer subscribers than the industry had anticipated.

The third question is the content itself.

Tubi's selling point is that it will offer British audiences something they have never seen before. But that's because it will never be able to produce the kind of strong local content that the BBC, ITV, etc. have produced. It's a gamble that it can build a lucrative audience based on Bollywood and Nollywood films.

Image: Photo: Tubi

And the biggest one is the advertising market itself.

Tubi continues to grow its advertising revenue as it builds its subscriber base, but there is a risk that ad sales growth will slow as the streaming channel matures.

Roku, a more mature company than Tubi, has had to lower Wall Street's advertising revenue expectations several times in recent years.

How all this unfolds will be an interesting spectacle in itself.

Ian King owns stock in Fox Corporation, Walt Disney Company, and Comcast Corporation.

Sources 1/ https://Google.com/ 2/ https://news.sky.com/story/entry-of-fox-corporations-tubi-to-uk-market-has-some-scratching-their-heads-but-should-be-taken-seriously-13162385 The mention sources can contact us to remove/changing this article

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