The big name streaming services did very well. Netflix, Hulu, HBO Max, Disney Plus, Apple TV Plus and all the other Pluses have revolutionized the way we make and consume movies and shows over the past decade, changing the entire business of Hollywood in the process. For a few (or not so few) dollars a month, we now have more entertainment than ever at our fingertips.
But it seems that the streaming revolution has hit a bit of a wall. Most services grow more slowly now that they’ve reached most of their potential audience. The tens of billions they spend on content every year seem to yield less and less. Investors are no longer sure that streaming is a great thing; the streamers are desperately looking for new ways to make money. The golden age of high-flying, big-spending streaming seems to be over.
Instead, something new is emerging in streaming. Free ad-supported platforms are the fastest growing part of the streaming business right now, and services like Tubi, Pluto, and The Roku Channel are starting to assert themselves as powerful players in their own right. Many of these platforms have been around for years and have quietly amassed large libraries of content and millions of users. And with users looking for cheaper ways to get their entertainment and studios looking for better ways to make money, they’re starting to make more noise.
The future of TV is free, there are ads and lots of channel surfing. It’s actually a lot like the TV business of yesteryear. That’s actually kind of the point.
When we talk about free streaming services, we’re really talking about two things. Both have silly abbreviations. The first is FAST, which stands for Free Ad-Supported Streaming Television – these are programmed always-on streaming channels that run 24/7 and are roughly analogous to the broadcast channels you’re used to. The second is AVOD, or Advertising-Based Video On Demand, which refers to a library of content that you can watch whenever you want. (Netflix and Max and the like are SVOD, Subscription Video On Demand.) For our purposes, we’re going to combine FAST and AVOD into free streaming.
The appeal of free streaming is in the name: it’s free! An increasing percentage of streaming subscribers say they are already spending more than they’d like on their services, and a Deloitte survey last fall found that 44 percent of people had canceled at least one paid service in the past six months. Deloitte also found that 59 percent of users were happy to watch a few ads an hour in exchange for a cheaper or even free subscription.
44 percent of people have canceled at least one paid service in the past six months
That’s why you see more and more of the SVOD services starting to play in ads as well. Netflix has already found that it makes more money per user with its ad-supported subscription – $6.99 per month with a few ads per hour – than it does with pure subscriptions. Disney Plus now also has an ad-supported plan. So is the new Max service, Peacock and increasingly the rest of the industry. Ads are the future of the entire streaming market, it turns out.
Still, there’s something uniquely powerful about the truly free streaming service. Because the free streamers don’t have to try and convince you to drop $8 or $10 or even $20 every month, they’re free to think differently about their product. And in many cases they land somewhere better. Companies like Tubi and Pluto make money every time you watch something, so their only job is to make sure you watch as many things as possible.
“Engagement number one for me is engagement,” says Adam Lewinson, the chief content officer at Tubi. “Because we’re ad-supported, we don’t have a duplicate revenue stream. We don’t accept credit cards, we never will – we make money when viewers consume content. Scott Reich, the SVP of content at Pluto TV, says the same thing. “I don’t have to pay anything – if I don’t like it, I just move on. So it is our job as a service to give you that reason to come back.”
That changes the way free streamers work in some wonderful ways. For starters, since these platforms have a huge incentive to get you watching something ASAP, they eliminate a lot of the UI cruft you see in most streaming apps. You don’t have to log in, you don’t have to scroll past all the big banners showing new shows you don’t care about. You just press play. Pluto takes this to a truly delightful extreme: when you load the app, it automatically starts playing the FAST channel you were last watching. It’s the way turning on the TV used to work: you turn it on and something is already playing.
Free streamers also need their content to be found, which means they tend to play along with the aggregators and search engines that aim to help users understand the streaming world. Whether you use JustWatch or Reelgood or just Google “how to stream” and your favorite new show, the free services tend to be well represented. And if the title you’re looking for streams on one of them? You don’t need to start a free trial or enter a password to start watching. You just pressed play. Yes, you sacrifice some of your on-demand pickiness and you will have to see ads. But it’s just so much faster.
Personalization is often important for these platforms as well. They don’t care what you watch as long as you watch so send you down a never ending Gordon Ramsay rabbit hole or addicted to all 11 million episodes of Project Runways is a fairly easy choice. Plus, Lewinson says, it’s a way to bring in viewers who aren’t looking for the same kind of Cultural Moment shows you see everywhere. “Part of our job, through algorithms and merchandising, is getting the right piece of content to the right viewer, learning what they’re interested in, and then serving them more.” He doesn’t think about how to reach the entire audience, but how to convince each individual person to keep watching.
For Pluto, Reich says the big shows and movies tend to draw people in, but that’s not why they stay. “What drives a lot of our viewing time is the individual series or the franchise channels,” he says. “The Star Treks of the world, CSI, Three’s company. That saves a lot of viewing time. And what people come back for is a lot of the classic TV and a little bit more of the niche channels — your food, your home, your lifestyle channels.
Putting all that together, Reich says, allows Pluto to really shine. Think about the way Spotify approaches playlists: it has the same set of songs as everyone else, but it remixes and presents them in new and better ways to keep users engaged. So it is with Pluto and channels. “We have a team of 50 different programmers who manage these channels and manage the guides of these channels,” he says. “And the audience doesn’t necessarily know that, but they feel it.”
There’s a downside to that strategy, though: Free streaming services don’t exactly generate big hits. Sure, spend a fortune on Succession getting a few million people to tweet about it every week may not be good business in itself, but it gives HBO tremendous cachet and brand awareness, leading more creators to come up with more great ideas, which in turn brings in a few more subscribers… to follow it out long enough, and there’s a real business there.
The other thing big hits do is drive brand loyalty. Viewers now sit down and open Netflix or HBO to see what’s new; no one really comes to The Roku Channel to see what hit original series just came out. To some extent, all free services are interchangeable commodities, only as good as the size of their library and whether they have the specific title you’re looking for. Hundreds of FAST channels are available, many of which can be accessed from multiple platforms. The free streamers have a lot of users, but not that many fans.
To some extent, all free services are interchangeable commodities, only as good as the size of their library
Not every free streamer chases hits. Reich says Pluto plays a different game — in part because it’s owned by Viacom, which also owns Paramount Plus, which has enough hit-hunting on its own. “We have a trillion studios and a trillion channels making original programming every day,” he says. “And because we can take advantage of that, we can figure out how to play off each other — how to catch up to Pluto and then throw it back to Paramount Plus, or one of the linear networks.”
But for Tubi, Fox Entertainment’s flagship streaming service, the hits can come. “My purchasing power five years ago was much less than it is now,” says Lewinson. He rattles off some of Tubi’s recent originals: The stepmom, about a murderous mother; dead hot, starring Vanessa Hudgens; and a documentary series of Shame, which just launched with an episode about Elon Musk. Is there an Emmy or Oscar ace in it? Probably not. But Lewinson says it’s a clear leap forward in ambition for the service, with more to come.
And on Amazon’s Freevee, the first real cultural moment of free streaming already seems to be taking shape. It’s called a show Jury duty, a mockumentary style show about a court case where everyone but the main character knows it’s all fake. The show became a hit and a TikTok sensation, sparking a huge amount of discussion online – plus a lot of “what the hell is Freevee and how can I watch it” stories. “Almost [every] studio and network succeeded,” producer Lee Eisenberg shared The everyday beast. “The only place that stepped forward was Freevee… There’s something really satisfying about everyone passing on something that’s then turned into something so special.”
It’s hard to know exactly how much Jury duty will change Freevee’s fortunes, but it certainly helped put the service on the map. The weekend after the show’s first episodes dropped, Google users searched for “Freevee” twice as much as ever before, including when Freevee first launched as a rebrand of IMDb TV. Freevee also hit the top 75 on the iOS App Store the same weekend, according to App Annie data, while it didn’t even make the top 200 a week earlier.
Hits help, there’s no doubt about that. But also without the Jury duty bump, the free-flowing flywheel seems to spin faster and faster. More people than ever are canceling cable and looking for new things to watch, while also looking for ways to spend less money on all those things. Most of the TV business has always been advertising, and that advertising is starting to shift to digital platforms. A recent report from research firm Omdia found that revenue from the FAST channel has grown nearly 20 times between 2019 and 2022 – and is expected to triple again before 2027, after which it will reach $12 billion in annual revenue.
That’s still only a fraction of total movie and show revenue, but free streamers are well positioned to get more of it over time. They don’t have to convince you to pay for their content; they don’t even have to convince you to sign up. All they have to do is give you something to watch, sell ads for it, and keep you updated. That’s been the TV business for almost a century and it’s coming back in a big way.