When I was a little kid, my dad and I used to have footraces down the street, an experience that I am sure was not unique to us. When I’d challenge him to a race, my father always asked me the same question: “Real race, or Winning race?” He was literally asking me if he should put in any effort whatsoever or if I wanted him to let me win. I’m embarrassed to say that I can only really remember choosing the latter.
I don’t know if this was good parenting or bad parenting — I can see it both ways. I let my own kids win whenever I can tell they need (or even really want) a win. Short-term love that can create longterm problems when real-life kicks in. Oh well, I’ll still run a Winning race anytime they want.
While the rest of the entertainment industry jumped out of the blocks in the streaming race, Fox paced itself. At a jog, the company made some shrewd business decisions, allowing opponents to lap it. The largest component to Fox’s streaming position was done to Fox, not by Fox.
NBCUniversal and Fox (via News Corp) launched Hulu in 2007; Disney would join later. Already with CBS All Access, which would become Paramount+, CBS sat out the joint venture. Years later, when Disney acquired most of Fox for what at the time was a massive sum of money (bid up by Comcast/NBCU to $71.3 billion), the ABC parent company gained control of the general entertainment streamer, which at the time offered next-day episodes of NBC, Fox and ABC shows. (Fox primetime series still currently stream next-day on Hulu, but that’s a licensing deal these days; Disney now owns Hulu outright.)
Fox became a DNP (Did Not Participate) in Hollywood’s hottest sprint. As Netflix, Disney, Amazon, Warner Bros. Discovery, Paramount and NBCU all dumped wads of cash to accelerate the growth of their in-house streaming platforms, Fox (and Sony, to be fair) mostly watched. (Apple was something of a tweener in its own approach to streaming.)
But then something unexpected happened. As it turns out, one of the promises of commercial-free streaming was not profit. Niche streaming, on the other hand, with its cheaper programming costs and advertiser support, was something of a different story. Fox kicked into a higher gear in 2020 with its $440 million Tubi acquisition, a bargain considering the ROI. According to Sensor Tower data, Tubi has the fourth largest ad spend among U.S. streaming platforms, behind only Hulu, Peacock and Amazon’s Prime Video.
These days, Fox also has products Fox Nation and Fox One, the latter of which combines the Fox broadcast network, Fox News Channel, Fox Business, and sports channels FS1 and the B1G (Big 10) Network, and runs $19.99 per month. Venu, a joint venture sports streamer with Disney and Warner Bros. Discovery almost happened until it didn’t. Fox has also invested in microdramas through an equity stake in vertical video leader Holywater.
On Monday, Fox made its big move from the back of the pack, announcing it had acquired Roku for $22 billion in (mostly) cash and (also) stock. It is a complementary deal worthy of compliments.
Tubi consumption is like 90 percent on-demand and The Roku Channel’s is about 80 percent FAST viewership, and there is only about a one-third overlap between their respective viewing audiences, Fox said on an investor call. Using some basic math — a little too basic to be honest — Fox expects to leapfrog NBCUniversal/Versant and even Netflix in total TV viewing once Fox + The Roku Channel are counted in combination on Nielsen’s Media Distributor Gauge. (Another shift will come first when Paramount and Warner Bros. Discovery become one, so Fox + Roku won’t actually podium.)
The Fox/Roku deal will not close until 2027, pending regulatory approval. If and when that happens, Fox CEO Lachlan Murdoch said his “expectation” is to keep Tubi and The Roku Channel as separate services.
“If you look at Tubi and The Roku Channel together, they are incredibly complementary services,” Murdoch said on an investor call. “It’s too early to say, but our expectation is fully that you keep the services separate. They serve consumers and our viewers in different ways.”
The upside is even clearer on mobile. The Roku app and Tubi would combine today for 50 million monthly active users in the U.S., passing even Disney+ in share, according to Sensor Tower, and trailing only Netflix (108 million MAUs) in streaming-entertainment app usage. (Hulu is separated out from Disney+, and YouTube isn’t even measured.)
“This move could effectively evolve Fox from being primarily a content owner to becoming a vertically integrated media platform that controls content, distribution, advertising and consumer discovery,” Abe Yousef, the firm’s senior insights analyst, wrote.
Fox also gets heaps of excellent first-party proprietary data that Roku otherwise kept under wraps.
But wait, there’s more. As great as Tubi is, Fox’s most-valuable content — live sports and news programming — isn’t on it platform (nor can it be). That pay-to-play stuff is on Fox One — and of course broadcast and cable TV — but Fox One hasn’t scaled (and cord-cutting certainly has). Roku’s operating system and recently revamped homepage, meanwhile, already exist in more than 100 million global streaming households. Roku City is a pretty good place to (prominently) deploy Fox One, Tubi, and even Fox Nation.
When the streaming race is finally over, Fox may make the medal ceremony yet.
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