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Hey! In case you missed it, we’ve dropped a few fun episodes about the live business. We broke down the business of StubHub with MIDiA’s Tati Cirisano, and examined the Justice Department’s lawsuit against Live Nation - Ticketmaster with NYU professor Larry Miller. We have another one coming on Monday so stay tuned.
Today’s memo is about Tubi, the popular free ad-supported streaming platform that is having its moment, especially with Black audiences. But will Tubi follow the same pattern with Black audiences that its parent company, Fox, once did? Let’s dive in.
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the Tubi opportunity
Has any media company had a better 2024 than Tubi? It started the year strong with a shoutout in Katt Williams’ interview on Club Shay Shay and hasn’t looked back. In May, the free ad-supported streaming platform surpassed Disney+ with an average of one million viewers.
Tubi is a treasure trove for classic movies like the Friday and Bad Boys franchises. Its originals, like Boarders, have been fun to watch. Tubi’s CEO, Anjali Sud, CMO Nicole Parlapiano, and their team have found active communities on Reddit and TikTok to inform its content strategy. It has a modern, low-friction approach to video. No need to worry about creating accounts or setting preferences. Just start watching and Tubi will do its thing.
The platform’s growth is largely thanks to Black audiences which make up a staggering 46% of its 80 million monthly active users. It tracks the early steps of the playbook from Tubi’s parent company, Fox. The major broadcast network built its initial audience through shows targeting Black audiences but later pivoted away from that same audience for several decades.
Will Tubi follow the same adoption-to-abandonment trend? Or will it flip the script for the modern era?
A brief history of Fox
When Fox launched in the late 80s, it stood out with its edgy shows that pushed boundaries, like The Simpsons, Married… With Children, and Beverly Hills, 90210. The network also leaned into younger Black audiences with In Living Color, Martin, and Living Single. It was TV’s version of the Interscope Records strategy.
At the time, Black TV viewers were still underserved. There was a strong belief that the Black American middle class was on the rise and companies across entertainment wanted in. That led to major deals like Andre Harrell’s $50 million MCA deal and Spike Lee getting enough funding to make Malcolm X. The industry wanted in on this ‘Black cultural renaissance.’
But Fox’s diverse programming soon became a temporary tactic to gain leverage. Fox used its early audience ratings to land major sports packages. NFL on Fox started in 1994, with John Madden and Pat Summerall calling big games for the Dallas Cowboys, San Francisco 49ers, and Green Bay Packers. In 1996, MLB on Fox started just in time for baseball’s post-strike, steroid-fueled, ratings boom. Plus, the league’s marquee franchise, the New York Yankees, was in dynasty mode. These deals were game-changers for Fox.
Unfortunately, though, the rise of the Black middle-class rise didn’t quite happen as fast as expected. Advertisers became less bullish on the opportunity since certain shows didn’t cross over to non-Black audiences. The programming shift was underway. Fox moved on from In Living Color and put more energy into The X-Files. The network ended Living Single started Ally McBeal, and concluded Martin around the time that it launched That ‘70s Show. Rinse and repeat.
Unfortunately, Fox wasn’t alone. UPN and The WB followed the same playbook. Black viewers were their early adopters but soon became low-hanging fruit until the networks moved upmarket to programs with broader (whiter) appeal. From 1997 to 2001, the number of Black prime-time sitcoms dropped from 15 to 6.
The trend kicked off a decades-long drought of Black sitcoms on major networks until the mid-2010s when shows like black-ish, Empire, and Insecure were released.
To be clear, the issue isn’t that Fox evolved their programming. Which broadcast network wouldn’t want the NFL or MLB in the late 90s? And of course, every advertising-run business needs eyeballs with purchasing power to stay in business. But it’s a shame that the pullback happened at the expense of the Black viewers.
What makes Tubi both different and similar
In traditional TV, programming and ad slots are a finite resource. Each network's decision to air its few dozen shows is also a decision not to broadcast hundreds of other shows that were passed on, canceled, or stuck in development.
That’s the opposite landscape of Tubi, where the 250,000+ titles in its catalog are eight times bigger than Netflix’s catalog. Adding new shows enhances the library without taking others away. And Tubi’s data-driven personalization, the algorithm can superserve various niches with ease.
The depth of Tubi’s catalog is a strength, but will the not-yet-profitable company feel the same urge that its parent company once did to focus on a broader viewership base and the ad dollars that come with it?
Tubi’s approach to its media is like Netflix and Max, and more like Spotify and Apple Music. Their music selection, like Tubi’s film selection, is endless. And like Tubi, those streaming services grew on the back of Black entertainment.
When Apple Music launched, it was elevated by Drake’s exclusive deal for his 2015 mixtapes and 2016 album, Views. Spotify’s high-growth phase in the late 2010s was fueled by playlists like RapCaviar and the streaming-era hip-hop music that powered its early growth.
Yet now that other genres and their fans have caught up to hip-hop’s popularity in music streaming, the unfortunate (and unfair) narrative is about hip-hop’s “decline” in music, which has already led to a shift in energy and investment from the major record labels.
Across the board, from music to TV to film to social media, Black consumers over-index on media consumption, are targeted early by new platforms, and then get overlooked as the platforms grow.
How can Tubi avoid the same pattern
As the SVOD services continue to raise prices, Tubi will remain an attractive alternative to those who don’t want to pay $20 per month for each streaming service. Churn is high for many of the non-Netflix services. The inevitable consolidation of the various paid video streaming platforms may work in Tubi’s favor.
Anjali Sud, Tubi’s CEO, says that its profitability is a conscious choice due to its investment in growth. But will there be a push to attract a wider range of viewers who will command bigger spending from advertisers? Will that mean more Tubi Originals that appeal to a broader audience?
But Tubi’s trump card (both literally and figurately) may be how it fits within Fox CEO Lachlan Murdock’s vision for the company.
NBC has Peacock, ABC has Hulu, CBS has Paramount+, and Fox has Tubi. Outside of the Fox Sports app, Tubi is Fox’s streaming strategy. Peacock, Hulu, and Paramount+ feature a wide range of content from all corners of their network’s catalog. Peacock just had a massive win with the Olympics, an NFL Wild Card Game earlier this year, and just won back the NBA on NBC.
Where will NFL, MLB, or Fox News fit into Fox’s streaming strategy in the future? These are all open questions.
Tubi’s rise has been incredible to watch as both a member of its audience and an analyst of its business. We’re in a new age, and its business reflects that. Let’s see if that’s enough to buck the trend of Black audience relationships set by the companies that came before it.
Chartmetric Stat of the Week - Lizzo
An artist's ability to generate streams is not always correlated with an artist's ability to sell concert tickets. One great example is Lizzo. As of August 11, she has 5.73 million Spotify followers, which is 559th on the platform. But she's part of a much smaller group of contemporary artists who can sell out a nationwide arena tour in the U.S.
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