By Alisha Green – Reporter, San Francisco Business Times
May 29, 2018, 7:07pm PDT
As tech giants like Netflix, Amazon and Facebook pour billions into creating original shows, San Francisco-based streaming service Tubi is growing quickly by focusing on giving viewers free content from traditional Hollywood.
Tubi has nearly 7,500 titles from studios including Paramount, Lionsgate and MGM. Compare that to the approximately 5,500 titles Netflix reportedly has these days.
So far, Tubi’s approach of providing free access to a wide range of titles for viewers seems to be working. Tubi said it has millions of monthly active users and its revenue has doubled every year for the past three years, though it declined to share specific numbers.
“Frankly, we are the best thing that’s happened to Hollywood in a while because we help them monetize their library of content,” Tubi CEO Farhad Massoudi told the San Francisco Business Times. “We will never do original content,” he said, because Tubi is focused on providing a revenue source for studios and networks in an era when they have to compete with the “beast of Netflix.”
Netflix isn’t the only one for traditional media to compete with these days, either. Social media giant Facebook said it would spend up to $1 billion on original shows in 2018. Video sharing site YouTube has also invested in original content, reportedly spending “a few hundred million dollars” on the effort.
Tubi launched in 2014 as an evolution of the company adRise, which was founded in 2011. AdRise managed and helped monetize video on demand services for media companies like Discovery Communications and Starz Digital Media. It turned those white label services into the Tubi site, aggregating all of the content from different media companies under the Tubi umbrella. The idea came as Massoudi saw the transition to the streaming of digital content and a “huge opportunity for using data to target, measure, and deliver better ad experiences for customers.”
Tubi users currently see between eight and 12 30-second ads each hour, powered by a real-time bidding engine that matches advertisers on-the-fly with the types of people they want to target. That means when a Tubi viewer watches a show on the site, they see ads targeted toward a category of potential customers the advertiser wants to reach. Massoudi describes it as a win-win for viewers and advertisers.
“Old TV used to be spray and pray,” Massoudi said. “Everybody watches the same commercial before the same game, the same piece of content. The new world is going to be dramatically better for everybody.”
He pointed to other companies with similar methods, like Hulu’s offering of an ad-supported subscription service that is slightly cheaper than an ad-free version.
“Consumers prefer to discount the subscription service with advertising so long as it’s a good advertising experience and it’s not too intrusive,” Massoudi said.
Tubi also uses a recommendation engine powered by machine learning to help viewers find the shows and movies that might be most interesting to them.
“Those are the kinds of things that traditionally Silicon Valley is really good at and I think Hollywood can benefit from partnering with us,” Massoudi said.
Tubi’s growth has been reflected in its headcount, which rose from around 37 people 18 months ago to nearly 90 now. Around 70 of those employees are in its San Francisco headquarters. It could add another 80 people in the next year.
Tubi has raised $35 million, Massoudi said. He would not share Tubi’s valuation.
Backer Foundation Capital first invested in adRise to help studios create their own applications for consumers to watch content, according to Foundation Capital Partner Joanne Chen. It then backed the company again when it became Tubi.
As Netflix and other streaming services start to focus on producing their own shows, “they are no longer an interesting source for the older generation of Hollywood studios to monetize,” Chen said. That’s made Tubi attractive to the old guard in Hollywood.
“It represented the next-generation TV platform for these studios,” Chen said.
Tubi is also doing well because it can deliver an experience for viewers “that is very different from cable television” by using machine learning to serve up recommendations, and it can keep advertisers happy by helping them reach a targeted, engaged audience, Chen added.
The biggest opportunity for Tubi will be continuing to grow its audience base and advancing personalization for viewers, she said.
“Over time I think Tubi can become the next-generation television platform, the one-stop shop for all your consumer entertainment needs,” she said.
Originally published by the San Francisco Business Times: As Netflix and Amazon produce their own shows, free streaming service Tubi focuses on bringing traditional Hollywood to viewers.