Streaming services like Netflix, Hulu, HBO Max, Disney Plus, and Apple TV Plus have transformed the entertainment industry in the last decade, but it seems the streaming revolution has hit a plateau. With most services having reached their maximum audience, the tens of billions spent on content annually are producing diminishing returns, and investors are skeptical about the profitability of streaming. However, there is a new and booming sector in the streaming industry – the free ad-supported platforms. Services such as Tubi, Pluto, and The Roku Channel have amassed large content libraries and millions of users, and are starting to assert themselves as power players in their own right. The future of TV is free, with ads and a lot of channel surfing.
The Appeal of Free Streaming
The appeal of free streaming is evident – it’s free! An increasingly large percentage of streaming subscribers are spending more than they’d like on their services, and surveys show that many are willing to watch a few ads an hour in exchange for a cheaper or free subscription. This has led SVOD services like Netflix and Disney Plus to dabble in ads, too. Netflix discovered that it makes more money per user on its ad-supported plan than from subscriptions.
Free streaming services are different from SVOD services as they only make money when viewers consume content. This means that they have a massive incentive to get viewers watching something as quickly as possible. Platforms like Pluto and Tubi eliminate a lot of the UI cruft seen in most streaming apps, and Pluto automatically starts playing the FAST channel you were watching last. Free streamers also need their content to be found, so they tend to play along with aggregators and search engines that aim to help users make sense of the streaming world.
Personalization is also important to these platforms, as they don’t care what you watch as long as you’re watching. Companies like Tubi and Pluto curate channels and programming to keep users engaged. The free streaming flywheel appears to be spinning faster all the time, and the advertising business is shifting to digital platforms. A recent report found that FAST channel revenue grew almost 20 times between 2019 and 2022, and is set to triple again before 2027, at which point it will be a $12 billion annual business.
While hits help, the free streaming services are interchangeable commodities, only as good as the size of their library and whether they have the particular title you’re looking for. There are hundreds of FAST channels available, many of them accessible from multiple platforms. The free streamers have lots of users but not as many fans. It remains to be seen whether the free streaming services can generate huge hits, but their unique approach to engagement and personalization is resonating with viewers, and it appears that ads are the future of the entire streaming market.
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