- Growing shift away from passive TV watching
- Consumers now spend 29 percent of their time on free video streaming services
- The author predicts free TV viewing is likely to come back once more
Just as Disney+ and Apple TV+ entered the streaming wars in November 2019, consumers were greeted with news and details around yet another streaming service: HBO Max. The new streaming service from AT&T’s WarnerMedia, which launches in 2020 and will feature shows like Friends, is certain to attract a sizable audience.
Sure, it’s the golden age of television. However, with an already crowded marketplace that features more than 100 TV and movie streaming subscription services, consumers are reaching subscription fatigue as the promised savings of cord-cutting quickly disappears. While the average consumer subscribes to three streaming video services, nearly half of consumers are frustrated by the growing number of subscriptions and services required to watch what they want, according to Deloitte’s 2019 Digital Media Trends survey.
These frustrations, coupled with frustration stemming from content disappearing from one library and reappearing in another, create an environment that makes it hard to find content and choose what to watch. The days of passive viewing seem to be behind us.
As consumers get closer and closer to the tipping point, I anticipate that 2020 will be the year where viewers will turn to free, ad-supported platforms as well as free over-the-air TV in greater numbers than ever before.
The Best Things in Life Are Free
Content on ad-supported OTT platforms, such as Pluto TV, The Roku Channel, XUMO, and others, provides viewers with alternative choices to consume content and to supplement their paid streaming services. These platforms are still vying and winning consumers’ attention, even though the majority of headlines have been slower to catch on to the growing ad-supported ecosystem.
According to the same Deloitte study, consumers now spend 29 percent of their time on free video streaming services. As more eyeballs are watching these ad-supported platforms, the ad dollars have been following. For example, Pluto TV has generated more than $1 billion in domestic ad sales alone and has grown to 20 million domestic monthly active users in 2019. The numbers are just as good for other platforms, which Hulu reached $1.5 billion in ad revenue in 2018, a growth of 45% year over year. Meanwhile, Roku generated about $416 million from platform revenue, which mostly comes from advertising.
The Future Is Behind Us
I anticipate that free over-the-air TV will continue to make a comeback. Digital antennas offer cord-cutters a one-time cost of $35-50 to get the major networks — that still have highly coveted programming like news and sports (NFL) — for free. In addition to having access to highly in-demand programming like the NFL, viewers now have access to all these other channels.
Similar to free, ad-supported platforms, viewership for digital antennas is growing. Almost a third of adult TV viewers now own a digital antenna, according to a study by Horowitz Research. Of those users, 24 percent actively use their antenna to watch content.
Diversifying Content on Platforms is Key
Just as advertisers are diversifying their media buys, it’s important for media companies to be diversified as well. When media and digital-first companies look at options to syndicate their content, ad-supported OTT platforms shouldn’t be overlooked. Media companies need to be everywhere the consumer is watching.
Through the convergence of social, digital, and television, content does not have to be siloed on one platform or channel. Media companies can opportunistically expand their content offerings and further diversify to reach new audiences. When media companies commit to one platform, it’s a risky strategy. Revenue, audience reach, and deal terms are at the mercy of executives or algorithms.
At Jukin, we’ve taken a diversified approach. We’ve seen growth in viewership on ad-supported OTT platforms with nearly 300 million monthly minutes viewed across our two linear channels, in addition to the OTA network TBD, which we program and operate for Sinclair Broad Group and which reaches more than 78 million households in the US.
So, what does 2020 hold?
I believe that 2020 will be the year where the ad-supported ecosystem will continue to grow and begin to close the gap on SVOD as consumers look for new (and cost-effective) content options. Looking ahead, free TV, including both OTT and OTA, is coming back in a big way and will give advertisers a path to reaching target audiences, and especially the elusive cord-cutters.