Free Streaming Adoption Beating Subscription Services as Prices Rise, Content Dwindles
New data released by Kantar could be a warning sign for streaming platforms that have announced they’re considering raising prices in the near future.
Nearly every American who streams video has heard the term FAST (free ad-supported TV) by now. FAST services and channels offer cost-free entertainment, without the hassle of compelling a user to decide which show or movie they’ll watch next.
- According to Kantar, 93% of households in the United States have at least one video-on-demand service, either ad-supported or subscription.
- FAST is the quickest-growing category of streaming, with 47% of households saying they watch one FAST service weekly.
- Netflix, Paramount+, and Max have all confirmed price increases are coming, but is that wise in the face of a lack of new scripted content?
Life in the FAST Lane
New research released by Kantar demonstrates that more Americans than ever have turned to streaming as a way to at least supplement their entertainment lineup. Its survey shows that 93% of U.S. households subscribe to at least one streaming platform, be it ad-supported video-on-demand (AVOD) or subscription video-on-demand (SVOD).
Kantar’s data also shows that 47% of American households watch at least one free streaming platform such as Pluto TV or The Roku Channel weekly. Household adoption of FAST services outpaced the adoption of SVOD services in the third quarter of 2023 by a two-to-one rate, making FAST the quickest-growing segment of streaming video on the market.
Will More Price Increases Lead to Greater FAST Adoption?
The survey also came with some warning signs for streamers who are planning to raise prices in the near future. It shows that Peacock, which raised prices for customers on both of its streaming tiers in July, saw a much slower rate of growth in August and September. Peacock also lost market share in August, and its growth fell significantly behind the rest of the VOD industry.
Disney could see a similar reaction in the next couple of months, as it enacted price increases across all of its streaming services on Oct. 12. Ad-supported users of Disney+ and Hulu were the only users who did not see a rate hike, and price-sensitive customers could respond by ditching their subscriptions in the coming weeks.
Netflix is reportedly set to raise prices within the next few months, and executives in charge of both Max and Paramount+ have said they see room to increase prices on their own streaming services soon as well. Specifically, those executives said that previous rate hikes did not lead to meaningful cancelation numbers, but conditions are a bit different these days.
The problem for streaming providers is that they have essentially no new scripted TV shows in the pipeline anymore. While the Writers Guild of America (WGA) strike has been settled, Hollywood’s top actors’ union is still on strike, and there’s no end currently in sight for that work stoppage after producers walked away from the negotiating table last week. Will users who were already keeping a close eye on their budgets be able to justify paying more for a streaming platform that offers less content? The answer in many cases will be no, which makes the plan to raise prices at this particular juncture much riskier than it normally would be.
“In Q3 2023, pricing strategies had a profound impact on subscriber retention in the US streaming market,” said Kantar’s Consumer Insights Director Hanna Avery. “Peacock’s July price hike resulted in immediate market share loss, primarily due to subscribers looking to save money. With the growth of FAST services outpacing VoD streaming, it’s clear that price increases become harder to justify in a content-scarce environment. As streaming services diversify into children’s content, sports, and live streaming to differentiate themselves, the landscape is becoming even more competitive. VoD services must provide supplementary value to protect against churn and cater to the evolving expectations of subscribers.”
Peacock
Peacock is a subscription video streaming service from NBCUniversal that includes original shows, blockbuster movies, and classic television series. Peacock is home to “Yellowstone,” and “The Office,” as well as original hits like “Poker Face” and “Bel-Air.” You can also watch live sports including NFL, MLB, WWE, Olympics, Premier League, NASCAR, French Open, College Football and Basketball, and PGA Tour. Premium Plus subscribers can stream their local NBC feed in all 210 markets.