Fox Acquires Tubi for $440 Million to Join the Streaming Wars

By StartUp City | Friday, July 24, 2020

Fox’s acquisition of Tubi is the latest move by big media companies to buy their way into the streaming market

FREMONT, CA: Fox has acquired the streaming service Tubi TV for $440 million while selling a 5 percent stake in the streaming platform Roku. The company used the proceeds to help finance the acquisition.

Tubi is an American streaming service based in San Francisco, California, United States, that launched in 2014. It is a free, ad-supported service, with advertisements shown during commercial breaks that can’t be skipped during programming.

15 Most Promising Gaming Technology Startups - 2018The service, partnering with premium studios and networks, provides people with thousands of films and TV shows. Additionally, the streaming service currently has 25 million users. Fox which is separate from 21st Century Fox (the part of the company Disney acquired in 2019 for $73 billion), did not have its own streaming platform.

Tubi primarily streams non-exclusive licensed TV shows and movies and will operate as an independent subsidiary of Fox and Tubi founder and CEO Farhad Massoudi will continue to lead the service. Apart from the $440 million, Fox may also owe $50 million in deferred considerations and unvested options over three years.

However, Fox is not planning to offer original content through its association with Tubi. Instead, the company has said that it will evaluate opportunities to expand the Tubi offering and bring national and local news as well as sports programs. Apart from this, it will also use the streamer to push its advertising business.

But, Fox will offer a large number of its older TV shows and movies for free to its subscribers. Thus, Tubi is not getting into the streaming wars with the likes of Disney+, Netflix, Apple TV Plus, or Hulu by bringing in original content.

Among the many ways a streaming service can make money, one of them is by not charging customers at all. This is often referred to as the AVOD model, where the content is free, and revenue is generated primarily by ads. This is how Tubi earns its revenue as well and which has proved fruitful for the streaming company.

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