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Before Netflix helped usher in the modern streaming industry and Facebook helped usher in the modern social media industry, YouTube was a one-stop shop for streaming video content. YouTube began with a focus on user-generated content but quickly expanded its scope. The breadth and variety of content set YouTube apart from other platforms, and in many ways, this remains true. YouTube’s monetization through advertising, while jarring to some users at first, set the stage for the modern landscape of ad-supported streaming content.
This report represents additional findings from a recent S&P Global Market Intelligence 451 Research survey, which asked US consumers about their use of free ad-supported streaming TV services.
The Take
Free streaming services claim a large swath of streaming users. Usage and satisfaction rates for this category, including services such as YouTube and Tubi, compare favorably to paid alternatives such as Netflix and Amazon Prime Video. In fact, many paid subscription services increasingly look and feel like free platforms because of ad-supported tiers. Adding advertising to subscription services unlocks new revenue streams in a mature and saturated market without many truly new subscribers to target.
Ad-supported streaming rivals paid streaming services
It’s easy to talk about the streaming landscape and focus solely on the likes of Netflix, Amazon Prime Video, Hulu and similar services. However, doing so ignores the large swath of content hours watched across various free services, which include YouTube as well as free ad-supported TV (FAST) services such as Tubi and Pluto TV that pair free streaming channels with on-demand movies and TV episodes. When survey respondents were asked which types of streaming services they had used over the last 30 days, free streaming video (53%) was on par with social media (53%) and not far behind paid streaming video (63%). Among free streaming services, YouTube (72%) remains the king, followed by FAST offerings from Tubi (41%), The Roku Channel (31%) and Pluto TV (28%). These compare favorably to the usage rates of the top paid streaming services. In fact, YouTube’s usage rate is higher than both Netflix (62%) and Amazon Prime Video (61%). While free video services may not have the same caliber of original or licensed content, a portion of the content they offer tends to include hard-to-find titles that may be unavailable anywhere else.
Both free services and subscription services are now chasing ad dollars
In recent years, Netflix, Amazon Prime Video and other paid services have implemented tiered subscriptions to keep revenue growing even as new subscriber growth slows. Tiers have different combinations of content and advertising based on monthly cost. While some subscribers have been frustrated to pay for a service and still see advertisements, many also like that ad-supported tiers provide less-expensive options.
Price is always a sticking point for consumers. When streaming subscribers who had canceled subscriptions were asked what their previous service could do to win them back, offering a free or affordable ad-supported subscription (32%) was the top response.
Furthermore, among respondents who had never subscribed to a paid streaming service, the largest proportion (33%) said more affordable pricing, including free trials or differently priced tiers, could entice them to subscribe. The explosion in the number of streaming services and the rising costs of subscriptions strain households’ ability to keep all the subscriptions they want. Cheaper ad-supported tiers help keep subscribers in the fold while tapping into growing advertiser demand for streaming video ad inventory.
Consumers are satisfied with free video services
Overall satisfaction with the top free services is solid and again compares favorably to the top streaming services. YouTube leads the way with 75% of users saying they are very satisfied with the service. This is not only the highest rating among free services — Tubi (63%), The Roku Channel (60%) and Pluto TV (56%) — but also rivals Netflix (70%), Amazon Prime Video (66%) and Hulu (66%). YouTube’s high satisfaction rate compared to other services is not just about the fact that it is free, but also about the variety of both long-form and short-form content available. In addition to unique creator-generated content, YouTube hosts movie trailers, shorts, memes and clips from sporting events to movies and TV shows.
Setting aside YouTube and focusing on the FAST services that are more similar to paid streaming services, the satisfaction ratings between the two types of services are comparable. Whether viewers are paying subscription fees or sitting through commercials, these services are broadly meeting users’ expectations to keep them watching.
Most consumers watch less than 10 hours of streaming per week
Perhaps the most important aspect of consumers’ assessment of value is the amount of time spent watching a streaming service. More than half (57%) of respondents said they watch less than 10 hours of free streaming services per week. This compares to 47% who said the same about paid streaming services. This level of usage tracks with many other trends we see in streaming services. Many consumers keep subscriptions active for convenience but mainly engage with specific content like new episodes of a series or new movie releases. That programming is typically delivered in chunks of 30 to 120 minutes. Even if someone is watching a handful of new series or movies simultaneously, they can still come in around 10 hours or less in viewing time and stay on top of their preferred programming.
The Smart Home Era is Here
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