Paid TV Streaming Services Can’t Buy Happiness for Hollywood

August 29, 2024 Stan

Hello there! Smartphones are great, but easy access to a camera means many of us have way too many photos. (Especially true if you have kids.) A professional declutterer offered tips for getting your digital images in order.

But first, what’s on (free) TV?

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The big story

Changing channels

Getty Images; iStock; Natalie Ammari/BI

If the best things in life truly are free, Hollywood is about to learn a brutal lesson.

More viewers are opting for free TV options in a move threatening to upend Hollywood’s decades-old business model of people paying for content, writes Business Insider’s Lucia Moses.

Hollywood spent years (and hundreds of millions of dollars) building massive libraries that people would be willing to subscribe to. By 2022, the business model was proving difficult, and cheaper, ad-supported options were offered.

But what’s really caught people’s attention over the past year has been “free, ad-supported TV” or FAST services. Chief among them is YouTube, which became the first streaming TV service to surpass 10% of total viewing this July, according to Nielsen. Netflix, meanwhile, sits at 8.4%.

Tubi, The Roku Channel, and Pluto TV are also gaining on their paid counterparts. This July, the biggest FAST services saw their share of TV viewing jump to 14.8% from 12.5% the previous year. Paid streaming’s 17.2% share, meanwhile, remained flat.

Every industry is dealing with cost-cutting consumers. But FAST’s rise isn’t just about saving a couple bucks. Many of the FAST services mirror old-school linear TV that let viewers flip through channels, making it an easier way to passively watch TV.

Chart: Andy Kiersz/Business Insider; Source: Nielsen

Legacy media companies have their own FAST services, but that’s only half the battle.

Fox’s Tubi has been the fastest-growing streamer in the past year, and is a hit with Gen Z. Paramount (Pluto TV) and Comcast (Xumo) are also in the mix, with Warner Bros. Discovery reportedly not far behind.

But growth is one thing. Making money is something else entirely. Despite launching over a decade ago and having 80 million monthly active users, Tubi isn’t profitable.

Figuring out how to make money from free TV is a big enough problem. But that’s not the only fire legacy media is fighting. A recent ruling against a to-be-launched sports streamer has opened questions about the future of the cable bundle and has competitors out for blood.

But Hollywood’s biggest problem might be its inability to keep pace with an audience that expects its content at lightspeed.

YouTube, TikTok, and Instagram have the benefit of an endless amount of user-generated content that’s always atop the cultural zeitgeist. Very demure. Very mindful.

Meanwhile, the traditional TV model takes much longer. And what once was considered hot can very quickly cool off when viewers finally get their hands on it. (See: “The Bear” season 3.)

And trying to replicate the magic of YouTube or social media on television comes with its own issues. Just ask Amazon about its MrBeast project.

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What’s happening today

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Second season of “The Rings of Power” drops on Prime.
Gap, Best Buy, Campbell’s Soup and other companies report earnings.

The Insider Today team: Dan DeFrancesco, deputy editor and anchor, in New York. Hallam Bullock, senior editor, in London. Milan Sehmbi, fellow, in London. Amanda Yen, fellow, in New York.

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