The new streaming television: free, but with advertising

Subscription video-on-demand platforms were the Holy Grail of the audiovisual industry, which interpreted the absence of advertising and on-demand content as the future of domestic television consumption. Netflix paved the way for other services. But the conversation is changing with the need for studios to monetize their content, and the economic and consumer figures are more than favorable for free and ad-supported streaming services with Pluto TV leading the industry with its FAST (free ad-supported) channels. supported television).

In 2021 it already generated more than 1,000 million dollars annually and in September 2022 it entered the Nielsen lists of online television consumption in the US with 1% of the total, compared to 8% for YouTube and 7%. .3% of Netflix. “This business had to be a business for losers because it had a similar experience to linear television,” acknowledges Antonella Dominici, vice president of Pluto TV in Southern Europe, the Middle East and Africa, “but it is a successful and highly paid experience.”

For those who are unfamiliar with this television market, how the platform works is simple: the Spanish viewer must enter the application or the web and, without prior subscription, has access to more than 120 channels. “The channels are made by a programming team that takes care of the proposal and creates the new channels by analyzing the consumption of the users”, he explains.

These are divided between the channels that take advantage of the Paramount bookstore, the company to which Pluto belongs; branded-channels created from specific commercial agreements with third parties; and then there are the pop-up channels that only program a series in a loop and for a certain time. According to Dominici, the ones that work best in Spain are the channels for crime programs and series, those that broadcast South Park, SpongeBob SquarePants or Star Trek, and they have been surprised by the performance of Melrose Place, a series that has never been available on payment platforms. There is also content accessible on demand.

“People are comfortable watching Pluto because they don’t have to learn anything new: it’s an easy experience that goes across channels,” he says. The attractiveness of companies in their sector is not only based on satisfying a more relaxed viewer, who seeks to put on a specialized channel and enjoy (without having to constantly choose), but also on offering advertisers “harder-to-find audience niches.” on traditional television.

Internal analysis confirms that “the introduction of advertising is not considered intrusive: it is accepted without finding it irritating” and industry reports support its optimistic mindset. A Variety report indicates that, after FAST channels earned 3.9 billion from advertising in 2022 in the United States alone, this year they will reach 4.5 billion and in 2025 they will already exceed 6.1 billion.

The secret of these channels, according to experts, is that they “offer content owners a way to monetize their assets and generate revenue streams with minimal investment.” This will become increasingly important as companies understand that their veteran original series “do not contribute to subscriber growth or retention” on paid platforms.

Instead, these contents “add value” and “boost” the free channels with advertising. Warner Bros Discovery is one of the first to rely on this theory: by canceling original HBO projects like Westworld or The Nevers, it removed the episodes from the HBO Max catalog and looked for a way to monetize them, allowing them to be viewed on Tubi, another FAST platform. .

“Streaming is the future,” Dominici says, “and there will always be customers looking for free content” while trying to satisfy the same need: “to be entertained.” The important thing is to be reactive after analyzing the desires and behaviors of the viewer: “The consumer now understands what is good and what is rubbish: the important thing is to give him a good experience.”