The streaming landscape is evolving as more viewers turn to free, ad-supported options, cutting back on traditional subscription-based services. Recent research from Parks Associates, presented at the StreamTV Show in Denver, CO, highlights a significant trend: spending on streaming services has dropped by 30%, with the average U.S. household now spending about $64 per month on OTT (Over-The-Top) SVOD (Subscription Video On Demand) services, down from $90 in 2021.
This shift reflects a broader reevaluation of entertainment budgets. According to Sarah Lee, Research Analyst at Parks Associates, “Consumers are spending less, but rather than go without, many are using ad-based alternatives to save on costs. A service needs to provide unique and ongoing value if it is to charge a premium.”
The Rise of Free Ad-Supported Streaming Services
Ad-supported platforms like Tubi and Pluto TV are becoming increasingly popular. These services offer a wide range of content at no cost, funded by advertising, which appeals to budget-conscious viewers.
Tubi, owned by Fox Corporation, boasts a library of over 40,000 movies and TV shows. It’s known for its diverse content, including a mix of classic films, recent releases, and original programming. Tubi has become a go-to for viewers looking for a vast selection of genres without the burden of subscription fees. Its user-friendly interface and the ability to stream on multiple devices make it an attractive option for many households.
Pluto TV, a ViacomCBS company, offers more than 250 live channels alongside thousands of movies on demand. What sets Pluto TV apart is its cable-like experience with scheduled programming, allowing users to flip through channels just as they would with traditional TV. This nostalgic approach, combined with a variety of channels catering to different interests—news, sports, entertainment, and more—has made Pluto TV a favorite among those who miss the traditional TV experience but want the flexibility of streaming.
The data from Parks Associates indicates that households are subscribing to fewer services. In early 2024, only 20% of U.S. households reported paying for nine or more services, down from 29% in late 2023. The average number of streaming subscriptions per household has also fallen below five. Additionally, 32% of households that cancelled a service in the past year did so to reduce expenses.
Industry Implications and Future Trends
Elizabeth Parks, President and CMO of Parks Associates, pointed out that all household services face challenges as consumers reassess their spending. “As consumers become more selective about their subscriptions, services that can offer a compelling mix of content and an excellent user experience will stand out. Educational content, ease of use, and seamless integration across devices are key factors that will influence consumer decisions,” she explained.
The increasing popularity of free ad-supported streaming services marks a significant shift in the streaming world. As viewers continue to seek value and manage their expenses, platforms like Tubi and Pluto TV are likely to see even more growth. This trend highlights the need for streaming services to innovate and offer distinct value to maintain and attract subscribers.
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