More consumers are choosing to watch free, ad-supported streaming platforms (also known as FAST channels) amid rapidly rising subscription prices for traditional streamers.
Ad-free streaming plans have become the primary target of price increases as media companies like Netflix (NFLX), Maximum (W.B.D.), and Amazon (Amazon.com) increase the costs of their respective offers. primordial (FOR) joined the price hike train on Monday, announcing will increase the monthly costs of its Paramount+ tiers, both with and without Showtime, starting August 20.
But as prices rise, consumers turn to other options. Free options.
FAST providers, which include The Roku Channel (YEAR), Tubi, a Fox affiliate (FOX), Paramount's Pluto TV, among others, experienced viewership increases during the month of May, according to the latest data from nielsen.
Tubi, for example, led Fox's year-over-year growth after a nearly 5% monthly increase in viewing. Obtained the best 1.8% on the platform total television usage during the month, with a record 1 million viewers tuning in. This represented a 46% year-over-year increase with Tubi's average audience surpassing traditional streamers including Disney+, Peacock, Paramount+ and Max, Nielsen confirmed.
Meanwhile, a 1.3% month-over-month increase in Roku Channel viewing lifted provider FAST to a platform-best 1.5% TV share. It was the only company that rose in the May rankings, ranking tenth overall.
"We are seeing [the FAST] "The model is resonating more and more with younger audiences because their tastes and preferences about what's good and what they want to watch are evolving," Tubi CEO Anjali Sud said on the Ringer podcast. "The City with Mateo Belloni" in April.
63% of Tubi's audience are "cord cutters" or "cord cutters", while 40% are not on other traditional streamers.
"It's different to be 100% free," Sud told Belloni. "We're not asking you to sign up for an advertising or subscription level. We're not trying to upsell you. It reduces fragmentation and friction."
It's a model similar to the one created by YouTube, owned by parent company Alphabet (GOOGLE, GOOG), such a huge success.
According to Nielsen, YouTube accumulated 9.7% of the total audience on traditional and connected televisions in the United States during the month of May, the largest share of television for a streaming platform ever reported by the agency.
Experts say YouTube's growth has led to increased interest in ad-supported options like FAST channels, especially among younger consumers.
"YouTube is essentially pushing us towards [this] "It's a very search-based experience," said Vikrant Mathur, co-founder of Future Today, a company that specializes in advertising-connected TV solutions. "I'm looking for a movie or a TV show. I find it where I find it. I'm going to watch it. As long as there are no barriers to that content, I prefer that experience instead of having to subscribe."
Still, it is not a proven business model. Tubi, which Fox acquired for $440 million in 2020, is yet to turn a profit and its long-term prospects are also in doubt amid the expected reacceleration of mergers and acquisitions within the industry.
"I'm probably a little more cautious than others," Macquarie analyst Tim Nollen told Yahoo Finance, noting that FAST providers must use a different strategic approach compared to other streamers given their lack of premium or exclusive content.
"The lack of premium content means they have to be effective at using technology to reach the users they already have," Nollen said. "It's a large audience, but it may not be a particularly engaged audience. I think they'll be successful at using technology to reach those users. But it might be in a slightly different way."
