Pay TV Gets Serious About Free Streaming

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When it comes to free streaming, U.S. growth has been fueled by pure players like Pluto TV and Tubi and connected TV platforms like Roku and Samsung looking to feed cord-shavers and cord-cutters in need of a linear viewing experience. Sixty-three percent of Tubi streamers are indeed cord-cutters and cord-nevers according to MRI-Simmons’ November 2023 Cord Evolution Study.

These companies have had a head start and a clear path to test and learn for years. However, in the past 18 months, pay TV players have decided that they too have a role to play in free streaming.

Why the Move?

If alternatives to pay TV flourish and bring more and more premium content with the flexibility and ease to navigate among AVOD, FAST, and SVOD offerings, then pay TV must take a hard look in the mirror and rethink its value proposition. It’s clearly imperative to stop the bleeding, as MVPDs lost 2 million subscribers in Q1 2024 and are estimated to lose another 10 million by 2029, according to Digital TV Research.

Free streaming offers more value for the money to existing subscribers and boosts time spent on the platform. It can also be used to acquire new subs or keep churners close by to then upsell them to the premium tiers or win them back. Finally, it provides a new revenue stream with advertising.

Who Is Active in the Space Now?

All of the U.S. vMPVDs have gotten into free streaming by now. The channels are either included in their basic tiers or in a standalone free tier. Philo announced in a blog post that all you need now is a registered account to access the 70-plus FAST channels and save programs in a cloud DVR for 30 days. Fubo launched Fubo Free, a free tier with more than 170 channels (without a DVR function), in a move to keep churners somehow engaged with the Fubo platform.

vmpd channel count

vMPVD channel count, February–May 2024

How About Europe?  

So far, cord-cutting has not taken Europe by storm (thanks to affordable and aggressive bundle strategies), but disruption is on its way there too. Digital TV Research estimates that Europe will lose 9 million subscribers by 2029. Revenues will decrease faster, though, with 22 billion (about $23.6 billion) by 2028, down by 5 billion (about $5.36 billion). In the meantime, smart TV penetration is rising rapidly in Europe, with 65% of European viewers now connected to the internet directly through smart TVs, an increase of 5% since 2022.

European pay TV stakeholders have learned from their U.S. counterparts and knew they had to make their move in free streaming. Here are a few examples of companies that launched FAST channel hubs in the U.K. and Germany:

  • German vMVPDs and Zattoo smoothly integrated channels within their existing EPGs.
  • K. operator TalkTalk powered by Netgem TV expanded their FAST channels aggregation FAST Lane.
  • Virgin Media O2 launched a bouquet of FAST channels during summer 2023. Launch partners were A+E Networks EMEA, All3Media International, Banijay Rights, Blue Ant Media, Extreme International, Fremantle, Little Dot Studios, and Tastemade.

What Do Pay TV Players Bring to the Table?

Despite headwinds, pay TV providers bring scale (71.3 million subscribers in the U.S., according to Leichtman Research Group, and more than 100 million subscribers in Western Europe by 2027, according to Digital TV Research). They excel at aggregating and driving viewers to their TV offers. They have done it with TV channels, then TVOD, and finally with SVOD for the past 10 years. FAST is just the streaming version of their TV bouquets.

What Is Their Unfair Advantage in Free Streaming?

The edge that all of these companies have is their existing EPGs, which are made of free-to-air, pay TV channels and now FAST channels. To the consumer’s eye, these FAST channels are just additional channels in the EPG. Consumers benefit from this ease of access plus the aura of long-standing traditional broadcast TV channels, as well as the chance to leverage cloud DVR features.

By the end of 2024, I expect most, if not all, U.S. and Western European pay TV providers to have their own free streaming channel hubs. They’re simply turning FAST into TV.

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