Are Free Streaming Channels the Secret to Beating Price Hikes from Netflix, Max, and Others?

In the ever-evolving world of streaming services, the battle between subscription platforms like Netflix, HBO Max, and others continues to intensify. As prices seem to climb higher and higher, many consumers are turning to free streaming channels as a potential solution. But are these complimentary platforms truly the secret weapon in combating costly price hikes? Let’s explore this intriguing phenomenon and uncover the impact of free streaming channels on the competitive landscape of the streaming industry.

As subscription-based streaming services such as Netflix and Max continue to increase their prices, many consumers are exploring alternative means of entertainment. This shifting trend has given rise to free ad-supported streaming platforms (also known as FAST channels) like the Roku Channel, Tubi, and Pluto TV, which offer a library of content at no cost other than the occasional advertisement.

The Appeal of Free Content

For budget-conscious viewers, FAST channels present a compelling option. They provide both linear and on-demand content, making it easy for users to find something to watch at any given moment. The accessibility and simplicity of these services are significant draws, especially in a landscape where subscription fees can quickly add up.

Tubi CEO, Anjali Sud, noted the appeal of their model on “The Town With Matthew Belloni” podcast, stating, “We’re not asking you to subscribe to an ad tier or a subscription tier. We’re not trying to upsell you.”

Content Variety and User Experience

Despite lacking in original, high-budget content, these free platforms offer a substantial volume of programming that includes older shows, classic movies, documentaries, short-form videos, and even sports. This makes them an attractive option for those looking to fill their entertainment needs without the hefty price tag.

Julie Clark from TransUnion describes the FAST model as a “sleeping giant” in the media industry. She highlights the ease of access and broad content library as key factors contributing to its growing user base.

Growth and Popularity

The popularity of these free streaming services is reflected in their steadily increasing viewership. For example, Tubi saw a nearly 5% rise in monthly viewership in May, marking it as a significant player in the market. According to Nielsen, Tubi secured an impressive 1.8% share of total TV usage, surpassing some traditional streaming giants like Disney+ and Peacock.

The Roku Channel also experienced a 1.3% monthly bump in viewing, pushing it to a platform-best 1.5% share of TV usage for the month.

Challenges and Future Prospects

While the FAST business model shows promise, it is not without challenges. Tubi, for instance, has yet to turn a profit. The lack of premium or exclusive content necessitates effective ad technology to target and monetize their audience.

Tim Nollen, an analyst at Macquarie, cautions that a large audience does not always equate to an engaged audience. Success will depend on how well these platforms can leverage technology to deliver targeted advertising.

The Role of Advertising

One of the key components driving the growth of FAST channels is the expansion of advertising on connected TV. Major players like Netflix, Disney, and Amazon have entered the ad-supported streaming space, creating more inventory and opportunities for targeted advertising.

According to MoffettNathanson, total advertising on over-the-top streaming services is expected to grow 33% this year, compared to a 17% increase in 2023. This shift is supported by more consumers opting for ad-based streaming tiers.

Consumer Choice

As Vikrant Mathur, co-founder of Future Today, points out, the choice to watch ads in exchange for free content is an appealing trade-off for many viewers. “People value choice at the end of the day. And we have always been used to watching ads, whether it be on a cable network or on YouTube,” he says. “But now we have a choice. And if I can save money, I may be more willing to make that compromise.”

Ultimately, while free streaming channels may not replace subscription services entirely, they offer a valuable alternative for those looking to navigate rising costs without sacrificing their entertainment experience.