- Xumo TV, a free, ad-supported streaming service, has grown revenue more than 300% in the past year.
- Most of the growth came from new deals with industry partners like Comcast and T-Mobile, Xumo CEO Colin Petrie-Norris told Business Insider.
- The company is a potential acquisition target and is in discussions with various companies.
As traditional MVPDs, cable, and broadcast companies face pressure to innovate through OTT services to keep up with changing viewing habits, ad-supported video on demand streaming services, like Xumo TV, are reaping the benefit.
AVODs that are privately owned don’t share many of their business results, but Xumo TV, a streaming service that launched in 2011 as a joint venture between Viant and Panasonic, told Business Insider that it had huge revenue gains in 2018.
Xumo’s revenue grew more than 300% in the first quarter of 2019 versus a year ago while streaming hours doubled, CEO Colin Petrie-Norris said. He wouldn’t give raw revenue numbers but said that in the fourth quarter, Xumo was profitable for the first time.
Xumo is targeted toward millennials and other digitally savvy viewers who are unhappy with pricey linear-TV options and are willing to sacrifice the latest news and movies for free video content.
Competitors Pluto TV and Tubi also said they made a profit by the end of 2018, a bright spot in the free AVOD industry sector where streamers such as Hulu, YouTube, and DirecTV are known to have poor margins.
Deals with traditional service providers
The free AVODs don’t all share their monthly average users, but Xumo, with 5.5 million monthly average users, falls behind Viacom-owned Pluto TV’s 12 million MAU and Sony Crackle’s roughly 10 million MAU.
The bulk of Xumo’s growth over the past year came from new distribution deals, Petrie-Norris said.
Xumo, along with Viacom-owned Pluto TV, comes preloaded on Xfinity Flex service, Comcast’s new $5-a-month aggregation service for its broadband customers.
Xumo is also included in T-Mobile’s recently announced TV service TVision Home, a $100-a-month streamer with more than 150 channels.
Petrie-Norris said Xumo is launching a FireTV app for Xumo and will be rolling out on two more devices in the coming months. While the service is in 35 million US homes, or 27% of US households, Petrie-Norris said he expects to be in 80% of US homes in a year. It’s also launching in Europe later this year.
Xumo, like all AVODs, is also likely benefiting from the slow rise of video streaming subscription costs. In the past few months, DirecTV Now, Fubo TV, and YouTube TV have all increased their monthly prices to $50 a month or more.
"Streaming is new pay-TV bundle," streaming analyst Dan Rayburn told Business Insider. The selling point of vMVPDs used to be that they cost less and provided more flexibility in service choices, Rayburn said. Now, the rates are nearing those of linear TV rates and there are fewer choices.
Xumo thinks the key to its success is its advertising strategy
Petrie-Norris said Xumo’s done well with content providers because they typically charge no upfront fees, instead sharing advertising revenue with Xumo.
Xumo lets distribution partners like Comcast or T-Mobile sell their own ads or allow Xumo to sell ads for them, Petrie-Norris said.
AVODs won’t replace traditional cable TV. They don’t include the content like sports and news that consumers covet.
But they increasingly look like likely M&A targets as people are hitting their limit for paid TV. After Viacom’s $340 million acquisition of Pluto, Viacom’s CFO said he thought Pluto could become a billion-dollar business.
There have been unconfirmed reports that Sinclair is looking to buy Xumo. Petrie-Norris wouldn’t discuss specifics but said the company is in discussions with various interested companies.
"We will select a partner if it’s the right partner for us and they believe as much as we do in this model," he said.
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