”The idea the average consumer will subscribe to Netflix, Amazon, Disney+, Hulu, HBO, ESPN+, Showtime, Starz and Discovery — that is ludicrous,“ CEO Farhad Massoudi says
Ad-supported television isn’t dying at the hands of Netflix and Hulu. It’s just evolving.
That’s what Tubi CEO Farhad Massoudi keeps in mind as he runs the streaming business that launched in 2014, and now has the largest free streaming library around, with 15,000 movies and TV shows on its service in the U.S and Canada.
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The free, ad-supported platform currently features critically acclaimed movies like “American History X,” “Dances With Wolves,” and “Hustle & Flow,” alongside well-known shows like “Kitchen Nightmares.”
On Wednesday, Tubi announced plans to expand beyond North America — where it recently surpassed 20 million users — with the service launching in Australia on Sept. 1. More than 7,000 titles will be available down under at first, including “3:10 to Yuma” and “The Blair Witch Project,” while other movies like “Dirty Dancing” will hit the service in the coming months.
“Our mission,” Massoudi told TheWrap, “is to make more premium content available to millions of customers across the globe.”
To Massoudi, the streaming revolution doesn’t have to cost customers an arm and a leg. He thinks Tubi can act as a “complement” to powerhouses like Netflix — especially as more players, like Disney and Apple, move into the space. Viewers are still open to ad-supported programming, he believes, if they’re offered compelling content.
TheWrap recently caught up with Massoudi to talk about the state of the streaming landscape:
Tubi launched in 2014, right as the shift towards streaming was getting underway. Are you surprised at how fast people have migrated to streaming?
Quite frankly, I thought it would happen a lot sooner. Now, the decline [in traditional cable and satellite] has been pretty dramatic.
What’s interesting is in the past 18 months, you see a massive decline in linear TV viewership, and that’s been fascinating to watch. It’s had massive ramifications on the media industry, as you’ve seen all these mergers happen as a result of this. Some of the major players decided they can’t play in this ecosystem and sold, and others doubled down on the content front and [decided to] go to war with Netflix.
What has been true is TV apps and on-demand video is replacing linear TV viewership, and that’s really the future.
The second thing I think is true is that, as people saw this trend hitting the consumers, everyone decided to launch their own subscription video on demand service. What has become more and more real is that the idea the average consumer will subscribe to Netflix, Amazon, Disney+, Hulu, HBO, ESPN+, Showtime, Starz and Discovery — that is ludicrous. There is no way, in no world, all these companies will be successful.
Can you elaborate?
When you hear all these projections for SVOD services over the next few years, that would require pretty much all us households to stop saving money and spend it all on subscription services, which clearly won’t happen.
It’ll either be the case that there will be a few giant winners, and everyone else will lose. Or there will be a bunch of companies with maybe millions of customers but not enough to make their SVOD business a viable business. In either case, we see the world moving towards smaller subscriptions services that serve a need, but don’t satisfy all the needs of consumers. And that’s where we come in — that’s been our strategy since day 1, to complement the SVOD services.
Several new streaming services, including Disney and Apple, will soon hit the market. Is this a concern for Tubi? Or can it help, in the sense that it will bring even more people into the streaming fold?
No, I don’t worry. In fact, in the past few years, we’ve had an incredible list of services. Hulu, for the past many years, has had the best content on TV from several major studios, since it had multiple owners.
Netflix has been out there. Amazon has been out there. Showtime has great shows, CBS has great shows. It’s not like there’s a lack of streaming services.
Now, there will be more big-pocket players in the space. But again, I don’t see in any world where someone can suggest all the services will succeed in getting subscribers. If that were to happen, I’d worry. But if anything, I think what will happen is this will further accelerate cord-cutting, and secondarily, customers will probably jump around between a bunch of these services. They’ll subscribe to 1 for two months, watch their favorite originals, then cancel and move on to the next service.
There are very few subscription services that have very good retention. Netflix being one of them, Amazon the other. That is really difficult to do when there are so many giants spending money.
What does your data show viewers are watching? Does that point you in a certain direction when it comes to acquiring shows and movies?
Unlike all the other video on demand services, where even in the case of large tech giants, they try to start with the content and curate the library around it, we’ve taken a different approach. We bring in a massive library of content, and our forte has been to use our data about what people like to watch, and [then] program and recommend content relevant to them, and then, secondly, use that information to go and license more content.
It shouldn’t be shocking that in every household, most couples don’t agree on what to watch on most Friday nights. There are very diverse interests out there for movies and reality TV shows. What we offer is a complementary service that broadens your access to a huge library of content.
Pluto TV sold to Viacom earlier this year for $340 million. What’s behind this renewed focus on ad-supported content? We’ve heard for years ad-supported is going the way of the dinosaur.
I fought that for years [laughing]. I’m actually thrilled people are warming up to the idea now.
Here’s what happened: A few years ago, when people started watching streaming services, they still had their cable; they still had other sources of media. As consumers cut the cord, and transitioned to OTT as their main source of TV viewership — you have to remember the average U.S. viewer watches about 5 hours of TV a day. And so, having one or two or three services is not enough, especially since they have a smaller library of content.
This is how TV worked a few decades ago. You had a few premium channels that offered you original content, and for the most part, they took about 10-15% of TV viewership in America. And the remainder was hundreds of basic cable TV networks. Now that TV consumption is fully shifting towards OTT, ad-supported TV will be a huge part of the future of television.