April 1, 2021 Gamut Presents

The Rapid Rise of FTC Streaming Services

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Gamut Presents

2020: A Breakout Year for OTT
From audience scale to engagement, to advertising investment – no matter how you look at the OTT landscape, it’s continuously growing. More Americans are spending time at home and the need for entertainment has surged, driving consumers to lean on streaming video to satisfy their media appetites, including free-to-consumer (FTC) services.

In 2020, streaming platforms gained +10M new viewers annually and screen time with connected TVs climbed to 1 hour, 17 minutes per day (+34% YoY) [1]. Brands are swiftly taking action to reach these highly engaged audiences and consequently, CTV advertising exceeded $8.1B last year and is expected to grow another +40% in 2021, reaching over $11.4B [2].

CTV

Cord Cutting Drives AVOD Surge
Conversely, traditional pay-TV subscriptions are decreasing. Cable, Satellite, and Telco providers lost 7.2M household customers in 2020, now reaching only 57% of U.S. households [3]. Cord-cutting has prompted OTT to become a preferred and exclusive method of engaging with video, garnering a larger share of viewership.

As consumers’ hunger for content increases, more providers are launching into the streaming marketplace in order to provide viewers with an array of programming options. In-demand entertainment coupled with 200+ streaming possibilities has caused the average number of TV providers used per consumer to jump to 4.8 in 2020 vs. 3.7 the year prior [4]. But, consumers are increasingly more mindful of their entertainment investments, and cost-efficient options are actively sought out. The desire to save money is cited as the top motivation for choosing AVOD services, followed by paying too much for other streaming services [5].

Enter the free-to-consumer streaming apps – OTT video services that allow viewers to access a robust library of licensed programming at no cost. The trade-off for consumers – advertisements. Two-thirds of streamers state that they prefer streaming free video content with commercials instead of paying for an ad-free subscription [6], so it’s not surprising that AVOD services are flourishing and audiences are expanding.

Free-To-Consumer Apps Emerge
The willingness to stream ad-supported video is evident as free-to-consumer apps gained more viewers in 2020. ViacomCBS-owned Pluto TV reported a +34% YoY increase [7] and Tubi, acquired by FOX, saw a +58% annual lift of monthly active users [8]. This upward trend is not expected to stall any time soon. Forecasts project that these services will each reach 50M+ viewers by 2024, a growth rate that outpaces major SVOD providers such as Netflix, Amazon Prime Video, and Hulu [9]. This developing audience can be attributed to increased awareness, as well as attractive content offerings that are easily accessed across connected devices. Diverse premium video is obtainable across a multitude of channels with programming options ranging from classic TV shows and movies to news and Spanish-language entertainment. Plus, some popular primetime series are made available by the TV networks to stream via the app soon after the linear premiere.

Streamer Audience Growth

Who is the Free-to-Consumer App Streamer?
To understand more about the U.S. viewers engaging with these free apps and the value they bring to marketers, an analysis was conducted across twelve of the major FTC services.

As traditional cable and satellite services are dropped, it’s expected that a significant portion of the free-to-consumer streaming audience is currently cordless or will be in the near future, placing them into the invaluable incremental viewer segment. Nearly half are cord nevers/cutters and they are 57% more likely to cut the cord in the next 6 months [10].

FTC App Users

Accessing free content doesn’t necessarily correlate with lower income, a misperception often associated with this AVOD audience. In fact, FTC streamers demographically skew towards sought-out advertising segments. These streaming apps draw families that align with key age groups earning a middle-upper income.

  • 60% are age 25-54
  • Nearly half earn a HHI of $75K+
  • 12% more likely to have 3 or more people in the household [11]

They have buying power across a wide span of consumer categories, making them ideal target customers for brands.

FTC streamers spend

Are more likely to:

  • Be frequent domestic airline travelers (3+ plane trips/last year)
  • Enjoy outdoor vacation activities such as golfing, fishing, and skiing

Plus, they influence purchase behavior among friends/family as well as digital shoppers. They are more likely to share opinions about products/services by posting reviews and ratings online and often provide advice to others while they are in the purchase funnel [12].

FTC Streamers are Influencers

Opportunity in AVOD
Connecting with relevant consumers on the streaming services where they are highly engaged is critical for any advertising campaign. As the cable universe shrinks, OTT is complementary to linear TV media buys and provides direct access to a unique audience that is no longer reachable through traditional video platforms. Free-to-consumer services are scaling and drawing diverse viewers with purchase power.  This is an advertising opportunity not to be missed.

Contact Gamut today to learn more about FTC Streaming Services and find out how you can effectively reach OTT audiences in every DMA.

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Sources:

[1] eMarketer, February 2021

[2] eMarketer, October 2020

[3] SNL Kagan, March 2021

[4] HUB Research, February 2021

[5] IAS, November 2020

[6] MRI-Simmons Cord Evolution Study, November 2020

[7] ViacomCBS Q4 2020 Earnings Presentation

[8] Tubi Audience Data 2020

[9] eMarketer, February 2021

[10] MRI-Simmons Cord Evolution Study, November 2020

[11] MRI-Simmons Cord Evolution Study, November 2020

[12] MRI-Simmons Cord Evolution Study, November 2020

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