Is Free Streaming the New Paid?

Brian Ericson, Director, Video Investment

October 7, 2021

Streaming TV is not a new methodology but has significantly expanded in recent years in terms of audience growth with over 80% of households having access to at least one connected TV, and consumers have become accustomed to the ease of access to content through streaming. To remain competitive against over-the-top- endemic juggernauts like Netflix and Amazon, media companies have prioritized production of streaming content over broadcast, investing billions of dollars in content and upending the traditional model. But the SVOD market is becoming competitive and with the compounding of fees across multiple subscription services, consumers are reprioritizing which are the most valuable to their viewing habits. In an Ampere Consumer survey, there’s a reported year-over-year downturn in SVOD-only users, with upticks in those using ad-supposed video on demand (AVOD) only or a combination of AVOD & SVOD usership. Viewers are also quickly adapting to free ad-supported TV (FAST) services which provide a live, linear-like experience on the television screen via the internet. For consumers, these two free services offer the ease of viewing like live linear and/or access to vast libraries of content on-demand without requiring a recurring fee.

Usership of these platforms also transcends age groups, with 44% of connected TV streamers now being over the age of 40. The pandemic is being credited with the rapid adoption of streaming video through internet connected devices. With this shift, older viewers are AVOD’s fastest growing segment, according to Ampere, with a 7% uptick in adults aged 55-64 years using AVOD in the last year alone.

Big media companies have already begun to take notice of the adoption of free, ad-supported streaming services as a trend with consumers, either acquiring existing or launching unique platforms as part of their growing ecosystems in an effort to remain competitive and relevant. Examples include the acquisitions of Pluto by ViacomCBS, Tubi by FOX, Xumo by Comcast, as well as Univision’s recent launching of Prende TV geared toward Hispanic audiences.

And it’s not just the legacy TV companies capitalizing on growth opportunities. Amazon is also significantly bulking up resources to position IMDB TV, the company’s free streaming service, as a destination for viewers, even wooing Judge Judy away from her tony syndicated show after 25 years on-air with a streaming show set to launch in November with 120 episodes in its first season.

Additionally, video rental company Redbox announced a partnership with Oscilloscope Laboratories (a film production and distributor) which would bring hundreds of hours of movies to the company’s AVOD platform. Google also intends to add FAST channels to Google TV (the power behind Chromecast and some Smart TVs) as a means to woo cord-cutters.

For both consumers and media buyers, this begs the question: Is free the new paid?

As consumers access like-for-like content without monetary impact, the big conglomerates have an opportunity to grow their audiences, expand syndication of their content, and monetize the ad- space through their digital pipes. To remain competitive in the streaming wars, these companies also plan to commission exclusive content for their platforms. Earlier this year, Roku acquired defunct Quibi’s library of content, and launched as Roku Originals; in only half a month, the content was streamed by more active Roku accounts than during Quibi’s entire run.

The AVOD and FAST platforms pose an exciting value proposition, circumventing non-ad-supported subscription services to reach viewers in a linear-like or on-demand environment. For pharma marketers specifically, these platforms can act as a viable option for video buys to reach consumers/patients in an environment akin to TV without cost. They can act as a complement to a broader linear campaign or as a supplement where linear might not be either too costly or too broad of an option.

As traditional TV ratings continue to decline but costs still rise, both broad and niche pharma marketers can find lost audiences through these platforms in the same lean-forward experience for the viewer but a more personalized approach through targeting technology, as a complement to traditional TV’s mass audiences for broad indications or to reach niche patient populations. This value proposition can also be coupled in that the out-of-pocket costs can be much lower than traditional TV, and with greater buying flexibility, therefore providing a viable test and learn opportunity.

These platforms can provide the same user experience for the consumer with the added power of harnessing the digital pipelines for the advertiser. For pharma brands seeking competitive reach, specific patient populations can be found in these lean-forward environments watching the ‘big screen’ through household targeting, mitigating wasted impressions versus the traditional one- to-many buying method of linear. Additionally, given the growth in these platforms with older demos, their potential is not just limited to younger- skewing viewers; activation can be enabled to reach a variety of demographics and therefore potential disease states OR HCPs in ‘blue jeans moments’.

Aligned with our audience-first approach, our view is to consider these platforms as part of a video test & learn to allow a more personalized approach to providing messaging to the right viewer but in an organic, linear-like fashion. The viewing experience is also a viable approach for reaching both DTC and HCP-as-consumer campaigns as a lower-cost, lower-lift option versus traditional or addressable TV.

Ultimately, the definition of “premium” should be optimized to now include both the quality of the content and also reaching valuable audiences in tandem.