Podcast: The Future Of Ad-Supported TV

People love to chatter about subscription services such as Netflix, Apple TV+, Disney+ and HBO Max. But free, ad-supported TV apps are also finding audiences – including Disney-owned Hulu and Viacom-owned Pluto. A similar startup is Tubi, a streaming service founded in 2014 that offers a huge library of movies and TV for free.

This week on AdExchanger Talks, Tubi CEO Farhad Massoudi describes how his company was incubated within adRise, an OTT ad platform business that he also ran as CEO.

After working to enable streaming TV apps, Massoudi says, “We learned that media companies that we partnered with were not going to be successful partnering with us, and so it ultimately wasn’t going to be a multibillion-dollar business.”

Massoudi continues, “A lot of media companies are trained to make creative gut calls. The DNA required to be a technology company is very different. You need to make a lot of data-driven decisions. A lot of them aren’t built to do that.”

So Massoudi pivoted, launching a consumer brand with long-tail content – mostly movies in the early days. He used this programming database to train Tubi’s algorithms and serve personalized content.

“Unlike media companies, we didn’t want to go and get a few expensive titles and lose a bunch of money and figure out what works,” he says. “We wanted to build a data-driven engine and use the data to decide what content to acquire, so we started with a longer tail library of content.”

As the company grows, its content investment has risen. This year it will spend in the low nine-digits on shows and movies – small compared to Netflix, but still a lot of money. Its library has 15,000 titles and over 40,000 hours of content. Massoudi says this model is more sustainable than what’s on offer from the huge contenders in the “streaming wars.”

“Any rational person would say that most of these services will not be viable in the next 12 months,” he says. “That combined with the fact that these services have a very shallow library of mostly originals because they need to justify themselves on your bill at the end of the month means that we [can] complement your handful of subscription services with a massive library of premium TV shows and movies.”

Also in this episode: Farhad’s upbringing in Iran and his sudden move to the United States, which shocked his family.

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