Free Streaming Platforms Are Going Mainstream

Big Company Backing

Streaming subscription service Netflix (NFLX) has seen its share price plummet this year by about 70%. Meanwhile, free ad-supported video-on-demand, or AVOD, apps are taking off. Market observers predict revenue from platforms like Tubi, Freevee, and Pluto TV will double with 2022 revenues approaching $19 billion.

Though the names may be unfamiliar to many, they are often backed by industry giants. Paramount (PARA) owns Pluto, Fox (FOX) owns Tubi, and Amazon (AMZN) owns Freevee. All of these AVOD companies were purchased within the last three years. With the growing number of Americans using internet-connected TV devices, the big players see profit potential in the space. Only 38% of US households had such devices in 2012, while an estimated 87% have them today.

Recent Successes

The bets have been rewarded. Paramount paid $340 million to acquire Pluto, which is expected to snag $1.24 billion in ad revenue this year. Fox picked up Tubi for $490 million just two years ago, and expects it to pull in $830 million from the service in 2022.

Streaming platforms, like traditional broadcast TV before them, rely on advertising revenue. Where they differ is that streaming tends to allow advertisers more artistic license and creativity. Industry observers argue that’s especially helpful as companies attempt to connect with younger audiences.

Can Original Ideas Make a Comeback?

With the cash infusion provided by their corporate parents, the streaming platforms are leaning into more original content. Some have had success attracting independent filmmakers who have largely been shunned by movie theaters. Also, they now have the buying power to add more recent and higher profile options to their line ups.

For consumers who may be tired of formula films or the endless re-telling of old stories, the industry shake-up could provide a refreshing array of original options, at an attractive price-point.

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