Linear programming lives on as FAST channels make gains in the U.S.Thursday, July 15th, 2021
Free Ad-Supported TV Gains Suggest Linear Programming Might Not Be Dead After All
Despite the proliferation of subscription streaming services in the streaming market, ad-supported streaming options continue to gain momentum, according to Horowitz Research’s recent State of Viewing and Streaming 2021 report. Almost half (46%) of TV content viewers in the U.S. report using an ad-supported streaming service (AVOD) at least monthly, and a full 28% use a free ad-supported TV (FAST) service with ad supported linear channels in addition to their on-demand offerings.
According to the Horowitz study—which was just released to clients this June—consumers are using a wide range of ad-supported services with linear content. Pluto TV, Tubi, The Roku Channel app, and IMDb TV are among the services consumers report using most often.
Ad-supported streaming services do not yet command the share of viewing enjoyed by subscription-based streaming services, a market dominated by original aggregators like Netflix but which also includes a wide range of direct-to-consumer alternatives like Disney+, Peacock, and Discovery+. However, the growth of these FAST services signals an important turning point for media companies struggling to adjust their business models to the streaming environment. Despite the explosive growth of streaming, linear (broadcast and cable) ad sales are still considered by most media companies to be their cash cow. This is due to the ongoing struggle to drive the same levels of revenue in the streaming environment.
Streaming is poised to eclipse traditional platforms in terms of share of viewing of long-form TV content, the Horowitz study shows. Among consumers overall, the pie is split rather evenly: 35% of self-reported time spent is now spent on linear content delivered via a traditional service (cable, satellite, or over-the-air through an antenna), while 37% is spent on streamed content (the rest is spent on cable or satellite-delivered VOD, content that is DVR’d, or DVDs). Among younger consumers, the picture is very different: a full 50% of time spent among 18-34 year olds is on streamed content, while only 18% of their time is spent with traditional, linear content. The need to monetize TV content in the streaming environment as robustly as it had been monetized in the traditional environment is a matter of survival for media companies big and small in this new ecosystem.
The Horowitz study suggests that indeed, consumers are very open to advertising in the streaming space—perhaps even more so than they were in the traditional, linear space.
While about half of streamers go out of their way to avoid advertising when watching TV, there is more tolerance when watching content that is available for free (or at low cost). Six in ten (58%) streamers feel that ads are a fair “price” for being able to watch TV content for free (i.e., telling us they do not mind seeing ads if they are paying very little or watching for free). Moreover, almost 4 in 10 consumers are starting to notice- and appreciate— the more customized, personalized advertising experience they are getting through streaming.
“Consumers’ love for entertainment content—and their desire to get as much of that content as they can for as little as they can— hasn’t changed. The fundamentals of the industry haven’t changed,” notes Adriana Waterston, SVP of Insights and Strategy for Horowitz. “What has changed are the expectations consumers have about how, where, and when they can consume the content they love, and the technology that exists to deliver those experiences. When delivered in the screen-agnostic, watch-anywhere, and highly personalized viewing experience of the streaming environment, we are seeing some consumers not just tolerating, but welcoming advertising, particularly when it is customized to their interests.”
State of Viewing & Streaming 2021 provides analysis of U.S. TV content viewers (watch 1+ hours TV/day), as well as key demographic and subscription segments. The survey was conducted online in May 2021 among 2,000 TV content viewers. State of Viewing & Streaming 2021 covers, among other topics:
- Viewing behaviors, including share of weekly viewing by platform;
- How viewers segment based on viewing behaviors and subscriptions;
- How viewers stream content: to what screens and using which services;
- Attitudes towards diversity and representation in media;
- Frequency of watching non-TV video content (“short form”) and types of content watched;
- How often and on what devices viewers use voice control.
In addition to the general market report, Horowitz will be releasing FOCUS Latino, FOCUS Black, and FOCUS Asian editions of the State of Viewing & Streaming 2021 report. These FOCUS reports cover the same breadth of topic areas as the main report, analyzed by key ethnic/racial segments, including age, acculturation, country of origin, income, and more.