How Tubi Is Coming for Netflix and YouTube in the New Streaming Wars

0:00Hey Tim, it's time for us to talk about your childhood. Well, my mother made me watch a lot of Murder, She Wrote, which I think set me up for a lifetime of mixed feelings about Maine, and it's apparent crime issues. Okay, not that part of it. I mean our generation's fond memories of walking the aisles of Blockbuster, trying to find that diamond in the rough and not getting fooled again by the cover art of Krull. Ah, yes, right. Anything with Angela Lansbury. I got some good news for you. There is a way to recapture that magic, and it's called Tubi. You either know Tubi is the great big free bargain bin of the internet, or for those who don't, let me read the relevant Onion headline.

0:39Tubi CEO combs through Goodwill used DVDs looking for movies to upload. That's great, but do they have murder, she wrote? You bet your Angela Lansbury commemorative mug they do. Oh boy. That's next.

0:57A quick note before we get into the episode, Tubi Parent Fox and News Corp, the parent of the Wall Street Journal publisher Dow Jones, share common ownership. Tubi CEO Anjali Sood has one of the most unique backgrounds of any head of any company in tech or media. She was born in Detroit, grew up in Flint, Michigan, daughter of Punjabi immigrants, eldest of three, and, get this, she wanted to be a playwright. Instead, she started climbing the education and later the corporate ladder, going from a Harvard MBA to Barry Diller protege to CEO of Vimeo, the video sharing service, by age 34. Now she's the head of Tubi, a free ad-supported streaming service.

1:41And it's gaining ground at a time when companies like Amazon and Netflix have introduced their own ad-supported tiers. Tubi recently announced that it had exceeded 100 million monthly active users and surpassed 1 billion hours of total viewing time in May. While those numbers are big, Sud says Tubi is thinking about audience retention. How many times do people come back? And what's the quality of that engagement? So is it people are choosing to watch on-demand content or are they just like, you know, turning on a live channel and watching in the background? Those things matter for advertisers.

2:16Tubi is also getting into original content, basically cost-efficient programs and films that serve existing fan bases who otherwise aren't getting served. In fact, Sud says the number one title on Tubi in the company's history is a movie called Sidelined, The QB in Me, starring a TikTok influencer and based on a young adult novel. Damn. Nice catch to you. Not my name, quarterback. What's your capsule review of it? So first of all, I like to share the tagline because I think it's great. Prepare to catch feelings. That was actually our tag, our log line for bold names when we pitched it. I'm so glad you guys passed on that one because it's really been great for us.

3:02But you'd be forgiven for not even knowing what Tubi is. It's a place with the biggest content library of any streaming service, full of obscure gems and new fan-favorite shows and films by up-and-comers. From the Wall Street Journal, I'm Tim Higgins. And I'm Christopher Mims. This is Bold Names, where you'll hear from the leaders of the bold-named companies featured in the pages of the Wall Street Journal. Today we ask, what's the battleground for the newest streaming war? And why is it ad-supported?

3:35Anjali, thank you for being here. um you know be honest especially in the world that you inhabit of streaming it feels strange to me to have something free it feels like a little bit suspect and i want to know what the catch is maybe what you're gonna do with my data and let's just start with tubi you're you're an ad supported free streaming service for those who are not already devotees but you still have your skeptics what do you say to people who are like what's the catch yeah so listen And Tubi is free. We think the future of entertainment is free. The biggest skepticism we hear is, well, then that must mean the quality of the content on Tubi isn't good.

4:18Right? That would be the reason why it would be hard to be free for consumers and entirely ad-supported. And I think our general belief, and I think we're hopefully proving that, is that by putting viewers first, we're just expanding the definition of quality. We don't define quality of content on Tubi in terms of the size of the production budget or how many awards a piece of content won. We just say let our audience be the arbiters of quality. and we don't judge and we will just obsess and listen and give them more of what they want. And we do back that up. We have the largest collection of Hollywood movies and TV shows in the world.

5:05We also have hundreds of originals that we have sort of made for our most passionate fans. And they are less expensive than a major original you might see on Netflix, But there's still very high quality, highly produced storytelling that resonates with fandoms. And so, and, you know, look, I think that the industry has historically underestimated the power of free streaming. I would say YouTube is a really good example of free ad supported streaming. And we love to invite skeptics to just watch and give us a try. And I think what we're seeing is that it is a very valid, thriving business model that's just been underestimated.

5:56Well, I want to get into the content here in a bit. But first, let's talk a little bit more about the thread there because I think you're right. While ad-supported streaming may have seemed unique maybe that just a few years ago, others are now embracing it. We've seen Netflix and Amazon introduce ad-supported tiers, and I'm curious how that's changed things for you and changed things for the industry. So I'll make a delineation first. 100 % free streaming is very different than an ad tier. So what we've seen is paid subscription streaming services adding less expensive but still paid ad tiers.

6:39Said differently, consumers are still pulling out their credit card and paying to watch ads. I went to watch a movie with my son on Peacock, and first we had like the countdown wheels like 160 seconds of ads. Yeah. And so I would argue that's an incredibly different value proposition, right? So what we're seeing is actually very few streamers have a pure play model like Tubi's where it's 100 % free. You can start watching Tubi and you will get right into the content. We don't even force you to register and give us your email address. Why? Because we believe that we need to be frictionless. Why do we believe that?

7:20Because we're competing for your time and attention and we don't define our competitive set as just streaming. It's anything that you choose to be entertained on. And in particular for younger generations, they're going to spend more of their time on TikTok and Instagram and in gaming and all of these other experiences that are frictionless. And I think our perspective is we need to be able to offer that same level of effortless entertainment if we want to earn that time and attention. I would also say, let's not forget that subscription prices have gone up significantly. Well, I do wonder with kind of Amazon and Netflix embrace of this, the idea of advertising and streaming is somewhat a validation.

8:06I get the idea that there's the tier and it's different. But them getting into streaming and advertising, has that helped you kind of legitimize that market or made it more appealing to marketers who are now, here are some bigger names and they're thinking, oh, this is a way to go? Yeah. So it's a good question. I think from a viewer perspective, generally, yes, we are seeing that people are more and more comfortable with the value exchange, right? I'm comfortable if I have to watch advertising just like I did in TV decades ago. They're comfortable if what they're getting in return is worth it.

8:45And that I would expect to continue. There was a period of time where I think the prevailing wisdom was that was only true of younger folks. But what we're seeing is it's across generations, that willingness. Well, that murder she wrote, if you want to get into it. I mean, there's always some kind of a serial killer on the loose in Maine. Exactly. I was just pleased to find out I could stream Running Man on Tubi the other day. Absolutely. All my old shorts are your favorite. I love it. You've just revealed a lot about your taste. I've noted that. What does my taste reveal?

9:24Nothing we didn't already know, Tim. That's true. That's true. But I would say, you know, so the value exchange, the premise is there. That said, there's a lot of work to do. And I think we've been spending a lot of time on how do we improve that ad experience, right? It shouldn't feel like an interruption. And there is a potential for us to just obsessively improve that user experience, make ads more targeted and personalized over time. And that should also make the experience better. So that's all true. I think from an advertiser perspective, certainly we have more competition for ad dollars now, right?

9:58When you have Amazon, Netflix entering the market, it does mean that there's actually more folks vying for ad dollars. But I would also say what we see at Tubi is our audience is quite incremental and hard to reach on other streamers. So a lot of our viewers, they're not paying. When you say incremental, you mean in addition to the folks that advertisers feel they can already reach through Amazon and Netflix? Yeah. So first of all, people are watching a billion hours of Tubi a month. So one, we have scale. We have reach and scale, which is always valuable. How many people? It's not one person watching a billion hours a month.

10:40No. So we recently shared we crossed 100 million monthly active users. But I would also say that's sort of a vanity metric. At the end of the day, what we are really thinking about is retention, how many times do people come back, and what's the quality of that engagement? So is it people are choosing to watch on-demand content, or are they just like, you know, turning on a live channel and watching in the background? Those things matter for advertisers. But if you look at the 2B audience, what we see is it generally skews more diverse and younger. So the majority of our viewers are Gen Z and millennial.

11:14And from everything we can see in third-party data, a good percentage of our audience are not on these other streamers. So if you're an advertiser and you want to reach younger audiences that are otherwise on social media with a brand-safe message, Tubi actually becomes a really exciting value prop. And we've seen that translate. So it's a competitive— Just to put a fine point on that, unlike social media, which is reaching these younger audiences, these audiences who are just more likely to be more diverse, LGBTQ, all the areas of content where you've really focused it to be, you offer advertisers a way to reach those audiences without worrying that they're going to be next to, you know, Elon Musk tweeting about his latest chatbot or just a piece of content that slips through the moderation AI at Meta or something.

12:03Yeah. So, yeah, it's brand safe. I mean, this is like classic, you know, we are very thoughtful about the brands that advertise on Tubi. But even more than that, remember, this is long form. So you're also getting a 30-second, you know, ad in front of a viewer, which allows you as a brand to tell a more contextual, nuanced message than you can on social media. And then on top of that, we've invested in very interesting ad formats. So I'll give you an example. We use AI to sort of understand the scenes in a movie. Let's say you're Ford and you, you know, we'll fast and furious, you know, it's a car scene.

12:44Like we'll find the right moment to put that ad up so that it feels natural and less interruptive. And that's really powerful for advertisers. And that's why. Just to be clear, when like Dom is revving the engine on his souped up Dodge, you might put an appropriate ad in there. We have the ability now to do that. We've rolled out those capabilities just recently. We call it 2B Moments. And it's basically an ad package that brands can buy that enables that. And we'll get smarter and better at this over time. But yeah, all of that is possible today with technology. And I think it's just, you know, as media companies, us embracing it and finding ways for it to deliver value both to the viewer and the advertiser.

13:29Next up, we're going to hear about the biggest original hit film in Tubi's history. And the surprising thing it can tell us about what people actually want to watch. And it's produced and starring a TikTok influencer named Noah Back. And that title, you know, it's 5 million views in the first five days. That's after the break.

14:00You know, it's interesting. When I look at Reddit, as you'd imagine I do often, one of my favorite threads is, what's the wildest Tubi movie you've seen? And you can go down a huge rabbit hole there, right? And you have, I mean, one of the things about Tubi is these rabbit holes, this ability to just go deep on things. But finding content, I think, is going to be key and has been key. Traditionally, your users have largely come through the TV sets, right? But last fall, Tubi launched Scenes for its mobile app, kind of a feature that feels to me very much like TikTok. The user can scroll through short clips of movies or TVs to surface something they might want to watch.

14:39You can click on it, right? If you're watching TikTok, you can't click into the movie, right? You got to go watch 10 clips of the movie on TikTok, right? You can actually go into your movie here. And I'm curious, what's that done? Since rolling that out, what's that done for 2B? Yeah, that's a great question. I think first, our approach has always been like be ubiquitous. We want to be on every platform. So we want to be on every TV. We're now in GM cars, I think, as of a couple weeks ago. We want to be mobile. We want to be every surface for consumers because our whole value prop is ease. And you've got to be able to rely on 2B to deliver a consistent experience that's sort of designed for you wherever you are in your day.

15:17I think we've all experienced now that we don't all just watch content in our living room. In fact, I think we recently just surveyed, it's not going to surprise you guys, that Gen Z is watching a lot of Tubi at work. Quiet quitters. Quiet quitters. Yeah, so that's happening. Was that self-reported or are you just looking at their IP address? No, no, no. This was with the third party. So it's not just Tubi. It's just generally that's what they're doing. Do we know what show they're watching the most at work? Office? I'll tell you my bet, actually. Okay, here's a fun one. Here's an example of why it's important to listen to viewers because you wouldn't guess what people are watching.

15:59We are seeing a ton of Gen Z fans interested in Scooby-Doo and Looney Tunes. Who would have thought that's what they're watching? Scooby-Doo, like the mystery of it? Who would have thought? Anybody who's worked at a pizza parlor, that's it. So to your question on scenes, so the example of scenes is us trying, to your point, to sort of build a more mobile-first discovery experience. We are seeing really great engagement and adoption. But what we're seeing is that there's sort of a journey throughout the day for a user where they might start by experiencing a movie clip or a scene on the mobile app.

16:40They'll start to engage in the content, but then they go grab a matcha latte or go back to work. And so then it really becomes about how do we create that ecosystem where we know that they've stopped. And when they turn on their television at home hours later, are we starting right at that moment? And have we taken into account that activity? You've said that 2B sees itself as the home for the next generation of Hollywood content. First off, I thought that was Quibi. Secondly, now isn't that... Too soon, too soon, too soon. That's right. Secondly, now isn't that YouTube, right? Where you're seeing all these crossover stars happen.

17:23How are you going to be the home for the next generation of Hollywood content? First, I'll say, you know, so I spent a decade before Tubi at Vimeo and we had a lot of independent filmmakers and sort of what I would call long form storytellers on the platform. And so everything that we're doing at Tubi is long form, which I think is a difference from YouTube in that we really do believe long form storytelling and we see it. We think young people want to see original content. They want to actually – they tell us that they want to see more content made from independent creators and diverse voices.

17:55And historically, as you can imagine, it's just been very hard to get a movie or TV. You have to go to Hollywood. You have to have an agent. You have to be in the right room with the right studio exec. You have to have a big budget. You have to get it greenlit. It has to have a box office debut. That has completely changed. Streaming has changed it, but so has YouTube. And then, of course, now with AI and some of the tailwinds there, it's just going to get easier and easier for high-quality content to be produced by many more people. And so I think our perspective is that can be very good. That's democratizing storytelling.

18:29It enables more types of entertainment. What's the biggest challenge with that is that attention and time spent is finite. And if you start to see a massive scaling up of content, it is going to be really hard to make sure that every story can find its audience. And I think that's the value proposition for Tubi in this space, which is for long-form creators. Some of them start as short-form on TikTok or YouTube. And we think because we have this model that's optimized for the long tail that in many ways we've tried to sort of flip this idea of niche content as actually being core. You're going to see us move very quickly here to just experiment and platform more creators and their stories.

19:19And, you know, coming from Vimeo, what I can tell you is there are plenty of creators who are thriving on YouTube. And it's not that we want to move them off of YouTube. It's that they also want to do other projects and go even deeper with their fans. And that's the opportunity. And I'll give you an example of something that is sort of a bit of a proof point. If you look at the number one title on Tubi ever in our history, it's a movie based on a young adult novel that had a bunch of followers on Wattpad. Wattpad, which is a place for bubbling up first fan fiction, but now fiction by anybody. Yeah, and it's produced and starring a TikTok influencer named Noah Beck.

20:08And that title, you know, it's 5 million views in the first five days. This is just coming through organic sort of that flywheel of like a creator, an influencer, and hearing that what fans are interested in and just bringing that into a movie. It's called Sidelined, the QB in me. and it's exactly What's your capsule review of it? So first of all I like to share the tagline because I think it's great prepare to catch feelings That was actually our log line for bold names when we pitched it I'm so glad you guys passed on that one because it's really been great for us but you know I would say it's a really good movie it's well produced it's on its own we see the audience isn't just young folks watching it but it did come with a built-in fan base and it did enable this was Noah's first long form project ever.

21:06And so that's what I mean when I think about the next generation. And it's just better recognizing that like culture moves at the speed of TikTok now. And we have to continue to show our fans stories that reflect their lived experiences and what's happening, what they care about. And there's many more ways for us to connect those dots than there were in the past. Well, speaking of something that's moving very quickly, we got TikTok and we have AI, right? And as we look at this technology develop very quickly, we're seeing its abilities rapidly improve. And I think maybe a year ago, there was this feeling that AI could be getting into video, but it was still a ways off.

21:46There was this kind of existential threat and dread out there that it would be replacing kind of humans to create content. And now you look at it and it's pretty impressive. Are we at the point or do you think we're near the point where generative AI can start creating content on Tubi? Yeah. So I think we should all assume, I don't think we're there yet, but we should all assume we will get there very quickly and probably faster than anyone expects. And I am generally excited by the potential that that can bring for creators and storytellers and ultimately then for audiences to experience many more different kinds of stories.

22:29You know, again, I've seen firsthand, I spent a decade trying to build tools to make it easier for creators because the process to produce high-quality content is just incredibly cumbersome, expensive, time-consuming. And it is magical that you can now almost take an idea that's in your head and sort of imagine it and bring it to life so much faster. And my bet is that platforms that are good at leveraging scale, data, long tail, they are going to be advantaged in that world. So the infamous Onion headline about you? You know it. Is this the DVD? DVD. Yeah. Tubi CEO searches Goodwill Bargain Bin for DVDs to upload.

23:17But you're saying that's your advantage? I am. And for the record, that was technically Tubi's founder, Farhad, not me, in that. I actually wish it was me. And I'll tell you, to your point, I think we very proudly wear. Tubi, we see ourselves as, as I said, we are not the arbiters of quality. Our audience is. And if our audience likes something, then we are going to do everything we can to give them more of that because that's what we care about. That's our North Star. So Sideline, the QB and Me, that is the new bar? I would stand by that. Check it out. It's a great movie. It's a great movie. But I would say it differently.

24:02The bar varies. You know, we work with aspiring filmmakers who are producing movies on a homegrown budget of$100 ,000 who will get millions of views on Tubi. We do Hollywood produced originals that you would not be able to differentiate from what you would see on another platform. We will have creator content. You'll see it's more just a broader perspective that people want to watch a lot of different things. Maybe the way to put it is in this kind of environment we're in, the monoculture is fading fast. So this idea that you would produce one, you know, we used to all tune in at 8 p.m. to one show, and that show had to speak to everybody.

24:48And it had to resonate with everyone in the country. And we just live in a personalized, on-demand world where that's not the case. And sometimes you want to feel like you want to see one kind of story, and sometimes you want to find another one. And why shouldn't you be able to do that in one place? We reached out to Google's YouTube. They did not respond to a request for comment. Coming up after the break, we're going to hear about Tubi's one big advantage that none of its competitors can match. Its parent company is Fox, which allowed it to stream one of the biggest live sports events in the world.

25:21So, for example, in the Super Bowl, you know, we had 24 million viewers come to Tubi on game day and 40 percent were between the ages of 18 and 34 and half were women. And that is helping expand the audience beyond the non-core sports fans to maybe some of the folks who are more in it for the commercials and the halftime show. That's next.

25:53So Tubi isn't profitable. You said it could be profitable if you wanted it to be. If you spent less in the bargain bin at Goodwill. Yeah. No, I would say this. We feel very comfortable in our path to profitability. And importantly, profitability for 2B won't come from cutting costs. It'll come from growing more efficiently. And that's why I say building that audience, getting advertisers to want to spend, that enables us to get to profitability while still growing our content budget at a time when so many others are actually reducing their content budgets, we're proving out that business model.

26:38And I fully appreciate that until the day that we announced we're profitable, that it's super fair to question, well, can this pure play free ad supported model work? But I feel very confident that we will get there and be able to demonstrate it. I mean, that growth, that demand for growth, that pursuit of growth sounds very much like a startup, right? But you're part of Fox, an established company, but you're acting like a startup, at least what you're telling me. I'm wondering kind of what pressure you're under, what kind of the balance, the promise of growth with the ultimate need for, I imagine, some kind of profitability.