Report: 37 Million U.S. Viewers Use Ad-Supported Streaming; Nearly 25% Have Clicked to Buy a Product
This revolution WILL be televised. A new report from the industry research firm Parks Associates shows that more Americans than ever are watching ad-supported TV over the internet. The numbers from Parks show that 37 million U.S. viewers now watch an ad-supported video-on-demand (AVOD) or free ad-supported TV (FAST) service.
That represents a nearly 7% increase in the number of households using such services since 2019. Parks analyst Alan Bullock attributes the increase to the uncertain economic climate, which is causing consumers to evaluate discretionary spending and switch from legacy pay-tv or subscription video-on-demand (SVOD) services as a means of cutting costs.
The report found that some services are seeing more success than others. Pluto TV, Tubi, Peacock, and The Roku Channel comprise the top tier of ad-supported streaming services. Each is watched in 9% to 11% of U.S. internet households, while Amazon’s FAST service Freevee (formerly known as IMDb TV) leads the group of next-most popular services, with 6% penetration.
Numbers provided by the streaming services themselves back up Parks’ findings. Tubi grew to a total of 1.3 billion hours streamed in the third quarter of 2022, further demonstrating the power of FAST services. Peacock grew by 2 million paying customers to 15 million in the same quarter, though its parent company NBCUniversal does not release how many users are on its AVOD tier and how many utilize its SVOD plan.
The numbers are not only good news for the services themselves, they are very important to the advertisers who show commercials on such platforms. Ad revenues for FAST services alone have topped $20 billion in 2022, and showing them on devices like mobile phones and smart TVs give customers a new way to interact with product placements.
“Ad-supported streaming opens several new methods of advertising, enabled by consumers’ use of multiple addressable viewing devices,” Bullock said. “These methods would be more difficult, if not impossible, with traditional broadcast or pay-TV services.”
Those new methods of ad interaction are paying off, according to the report. Twenty-three percent of users of ad-supported services said that they clicked on ads shown to them while watching TV; the same percentage reported buying an item after utilizing an interactive ad to get to it.
All of these numbers are extremely good news for Netflix and Disney+. Netflix launched an ad-supported price tier on Nov. 3, and Disney has announced an AVOD tier will be available for Disney+ on Dec. 8. Industry analysts have suggested that both companies could see more than $1 billion in additional revenue from their ad-supported plans by 2023. If ad-supported TV options continue to gain popularity at the rate they are currently, those projections may have to be revised upwards.