Free ad-supported TV (FAST) is having a strong week. On Sunday, Fox-owned Tubi attracted 13.6MM of 127.7 million Super Bowl viewers (peak 137.7MM). That surpassed Amazon Prime’s average viewership for Thursday Night Football by only 400,000. Tubi’s Super Bowl ad—about a young man born with a fleshy cowboy hat as part of his head—delivered its own sales pitch of “choice and control”: “If It’s In You, It’s In Here.”
On Tuesday, YouTube CEO Neal Mohan revealed in his annual letter that “TV has surpassed mobile and is now the primary device for YouTube viewing in the U.S. (by watch time). According to Nielsen, YouTube has led streaming watch time in the U.S. for two years.
This validates my observation from last September: “creator content increasingly competes with professionally produced content. Consumers no longer perceive Hollywood’s content ‘quality’ as an impetus for spending money on media or devoting time. ”
Both developments present a difficult question for large media companies not named Fox (and including Netflix): How will they adapt to this new competitive balance?
Key Takeaways
The success of Tubi‘s Super Bowl strategy and YouTube’s living room dominance reveal “portfolio reconstruction” need not only focus on gaming and AI.
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Three Models for Gaming & Television
In “Reconstructing The Media Conglomerate Portfolio For AI, Games & Streaming”, I identified three emerging business models that compete at the intersection of gaming and television:
Startups going down a rabbit hole with a startup where games, TV, streaming and decentralized media all intersect (e.g., Fable Simulation’s Showrunner)
Focus on earnings before interest, depreciation and amortization (EBITDA) and games but build the “wrong” product (Warner Bros. Discovery, “New Paramount”)
Focus on EBITDA and “crawl, walk, run” to games and the right product (Netflix)
These market dynamics each and all raise the question of why large media companies still need to exist. In particular, Tubi, YouTube and Showrunner all present big media companies with a limited existential purpose: To receive checks from “makes” and “views” of its licensed IP.
However, these companies face a fiduciary duty to shareholders to act in their best interests. That duty conflicts with a growing reliance on accounts receivable and/or funding business models in decline (and vulnerable to disruption from AI).
The Trouble with Tubi
Fox’s bet on Tubi as a outlet for the Super Bowl offered cord-cutters free viewing in exchange for email registration.
That left it is less vulnerable—if not all-but-invulnerable—to churn than its competitors: Research firm Antenna reports 35% of Super Bowl LVIII weekend Sign-ups remained after eight months and 35% of Super LVI weekend Sign-ups remained on Peacock after ten months. Paramount+ also never disclosed the Nielsen figures for total number of viewers who tuned in.
This presents uncomfortable questions for Disney, NBCUniversal and Paramount:
Should NBCUniversal and Paramount distribute the Super Bowl on free services (Xumo or Pluto, respectively)?
Has Tubi changed consumer expectations for tentpole sports events for subscription streaming? If so, how will that impact Disney’s upcoming launch of its ESPN flagship?
NBCU will test these questions with Super Bowl LX in 2026. They have 36 million subscribers to Peacock but have told investors that they would consider partnerships in streaming “despite their complexities.”
They are also pursuing “portfolio reconstruction” this year: A “SpinCo” will emerge later this year combining networks (USA Network, CNBC, MSNBC, Oxygen, E!, SYFY and Golf Channel) and digital assets (Fandango, Rotten Tomatoes, GolfNow and SportsEngine).
Tubi & Fox’s “Existential Challenge”
Big media companies ultimately face an “existential challenge” that invites both “portfolio reconstruction” and the need for “a generational shift in management teams and philosophies".
Comcast’s SpinCo is a real world example of “portfolio reconstruction”: “If management cannot optimize shareholder value across unrelated assets, then they should either discard those assets or find managers who do understand how to connect them in ways that audiences want.”
Tubi’s success reflects both. To date, Fox has actively pushed ad-supported Tubi (though Fox CEO Lachlan Murdoch says this will change by year-end). Tubi CEO Anjali Sud is an example of a generational shift in managers. She was previously CEO of Vimeo where consumer “choice and control” was central to the model.
Since her hiring in 2023, Tubi has captured increasingly younger demographics without pursuing the complexity of pivoting into gaming or AI. It has done so by leaning hard into personalized TV viewing: More than 34% of Tubi viewers are ages 18-34 and more than half are Gen Z or Millennials and nearly half are multicultural. In 2024 it reported 55% growth in Multicultural demos including Latine, African American and LGBT audiences and 63% growth in female audiences, year over year.
Younger Audiences, Younger Entrepreneurs
Tubi’s success suggests that as long as broadcast remains a part of TV consumption—22.4% of monthly TV viewing in the U.S., just behind cable at 23.8%, according to Nielsen’s most recent The Gauge—the most drastic measure of ”portfolio reallocation” may be FAST models over subscription models.
Mohan points to alternative measures lying within Hollywood’s “healthy startup culture”: Creators are “leaning into new models of production, building studios to elevate their production quality, and exploring new creative avenues. They are creating a whole new playing field for entertainment and the businesses behind them.”
With consumers facing an abundance of choices, Mohan envisions YouTube enabling as many permutations of business models for those choices as possible over the next twenty years.
Against the backdrop of the three models at the intersection of streaming and gaming, the message to large media companies not named Fox is clear: There may be no single answer to what “portfolio reconstruction” should look like. Disruption is inevitable. Embracing consumer “choice and control” is the only path forward.