By Andre La Rosa Rodriguez
TV analyst Alan Wolk came across free ad-supported streaming television (FAST) in 2018 as it was expanding into Europe. While skeptical of how much it would grow, he knew the type of service needed to be taken as a serious contender alongside Netflix.
“All these big streaming services have global ambitions. Netflix is in [almost] every country in the world,” Wolk said. “But once you get out of the U.S., Canada, Japan, Europe, people don’t have money for subscription TV services.”
“Free was going to have to be the way for the rest of the world.”
FAST services offer their content like traditional cable TV with commercials and linear channels that show programming from different networks. The trade-off is that it’s free and channels can stick to one program, meaning a channel named Doctor Who will play Doctor Who episodes 24/7. Subscription video-on-demand (SVOD) streaming services like HBO Max and Netflix have shown interest in offering FAST as they chase further expansion. Amazon Prime has already set up their own free streaming service as Amazon Freevee.
‘A tiered pricing system’
Canada welcomed Pluto TV, a FAST service owned by Paramount, in December 2022 which is the latest free streamer that is now available in the country. Pluto TV is the third service that Paramount has made available to Canadians after launching Paramount+ as both an SVOD and a less expensive commercial-filled version called ad-supported video-on-demand (AVOD).
A 2022 TVRev report, co-created by Wolk, highlighted Paramount as an example of a forming “three-tier system” where a company offers SVOD, AVOD, and FAST. Wolk noted that the majority of streaming companies will have to eventually offer all three types of service if they want to be able to keep up with the industry. The report labeled Pluto TV as the largest FAST platform currently offered globally. Because of Paramount’s success, he’s sure that it’s only “a matter of time” before Netflix and Disney+ launch their own free channels.
Both companies have recently launched AVODs to create cheaper options for users as their subscription prices continue to grow because producing more content for their library is becoming more expensive. Netflix has hiked up their subscription prices six times since their $8 plan at launch in 2008. They have their SVOD plans subdivided into three categories — basic, standard, and premium. As of April 2023, the Canadian premium Netflix monthly plan, the most expensive tier, is $20.99.
Brett Caraway, an associate professor in the Institute of Communication, Culture, Information, & Technology at the University of Toronto, called the variety of services and subdivisions in one company as hybrids and highlighted that FAST is the latest addition to the tier system that’s taking shape amongst streaming services.
“It’s based on the ability and willingness to pay,” he said. “It allows [companies] to extract more value out of people with more income, while still retaining the people with less income by offering them a cost-conscious pricing mechanism.”
He added that it’s also a way to counter the growing frustration of “subscription stacking” since content is getting increasingly scattered across multiple services. Star Wars and Marvel franchises are only on Disney+. Friends and HBO shows are found in Crave. Stranger Things is exclusive to Netflix. A Hub Entertainment analysis found that last year over half of streamers in the U.S. were subscribed to at least three of the top five SVOD companies — Hulu, Amazon, Netflix, HBO Max, and Disney+.
“All of a sudden you find you’re paying subscription fees across all of these different services and it gets expensive. Really expensive. Maybe even more expensive than what it was when we were just paying for cable,” Caraway said.
“What we’re seeing is a realization that we need a tiered pricing system,” he said.
A 2023 report by Roku Canada, a video streaming service, found that about 57 per cent of streamers are feeling more economic pressures than in previous years with inflation, and cost of living. Roku found that these factors are pushing users to pay more attention to what each TV streaming service has to offer and whether that justifies the monthly price.
Caraway highlighted that FAST services will attract the “price-conscious” and the “casual” viewers which is why there is a tolerance to commercials.
‘There’s a comfort factor to it’
While the majority of the TV industry shifted to ad-free services in the 2010’s, Wolk noted that not everything needs to be commercial free. He divided TV watching into a category of content where people don’t want to be disturbed, and the content where there will be less attentive viewing or is placed as background noise.
Wolk said that the majority of content in FAST services take advantage of the less attentive viewing experience. The majority of channels include news, reruns of older shows, and movies.
Tubi, another streaming platform known for its FAST service, reached 64 million subscribers in January 2023. They doubled the number of users within two years. It took them six years to get the first 30 million. David Soberman, a marketing professor at the University of Toronto, said that the growing number of viewers is only one of several factors that needs to be considered when looking at the growth in FAST.
“Anytime you’re running a business there’s not an absolute answer, right? So [it] sounds like a lot of subscribers, but that doesn’t mean very much. What’s important is the percentage of viewing time spent on FAST,” he said.
A 2023 Tubi insights report said that average viewing time rose by 27 per cent in 2021 and pointed to their growing library as a factor. As the content in FAST services diversifies and expands, Tubi has determined that one in three streamers will want to cut back on their monthly subscription fees.
Pluto TV’s expansion to Canada was launched with an additional 30 Canadian-based channels after striking a deal with Corus Entertainment. Some of those include local news channels like Global News, kid-friendly channels like Franklin, and serial show channels like Degrassi. Wolk highlighted that FAST streaming libraries will aim for casual content.
“This is free, it’s easy, no commitment, no one is asking for my email, and there’s a comfort factor to it,” he said. “It’s a mindless thing I can have on. I know the characters, I’ve probably seen this episode three times, I know what’s going to happen. It feels comforting.”
“If you give me free content, I’ll watch a few ads. That gives me time to run to the kitchen, to run to the bathroom, whatever I need to do,” Wolk said.
‘It’s an evolving ecosystem’
Despite the growth in FAST, Wolk predicted it will be another five years before the majority of the TV industry fully accepts free channels as another section of streaming.
“It’s been a journey watching the industry change, but really slowly,” he said. “There’s a lot of moving pieces in TV.”
He noted that “it’s an evolving ecosystem” that is halfway through the current transformation. The other half will rely on the continued expansion of the channels, how companies view the service in comparison to other types of streaming, and most importantly what audiences think of FAST.
Soberman stressed that as of now the appeal of ad-free streaming is still stronger than whatever FAST is offering. He knows people who have gone to “check out” the service, but still feel that SVOD is more suitable for them.
“Will these services that are free with advertising carve out a portion of the market, the answer is yes,” Soberman said. “Will it be higher than 25 or 30 per cent, I don’t think so because I think one of the reasons that people are so addicted to streaming is because they don’t have to watch advertising.”
Caraway echoed that ad-free is a custom that most consumers have gotten used to as part of their tv experience. Caraway is currently subscribed to four SVOD streaming services. He has only taken “a peek” at FAST streaming.
“I’ve gotten so used to advertising-free viewing that it’s hard for me to go back ,” he said. “When the commercials are interjected into the content that I’m after it feels so much more intrusive now than it used to 20 years ago when I was more acclimated to listening to advertisements.”
However, Wolk highlighted that commercials in FAST will be more targeted to its viewers and be shorter than what is shown on cable TV. A 2022 TVRev advertising report predicts that cable networks will continue to lose revenue made from advertisements because viewership will decrease each passing year and that the shift away from cable is inevitable.
“Eventually it will no longer be profitable for the cable companies to strike deals with cable networks,” Wolk said. “At some point [cable companies] are going to say ‘yeah, it’s not worth it anymore’.”
But he stressed that the changes in the industry are as slow and as small as a “drip” of water and said that “cord-cutting” and the full switch to streaming will be a long process. His interest remained in FAST as it follows in the same footsteps as cable TV did during its growth in popularity many years ago.
“[Cable TV] grew up,” he said. “You’re starting to see that with FAST now. That they’re growing up and becoming better versions of what they were.”.
Wolk predicted that by 2027 the majority of TV viewership will be in streaming. That SVOD will be viewed as the new primetime, and FAST will be viewed as the new cable.