A Nielsen report from this month on free ad-supported television (FAST) like Amazon (AMZN) Freevee and the Roku Channel shows that FAST services are growing. There are 21 percent more FAST channels than there were eight months ago—possibly because free channels provide some relief for customers feeling the pinch from paying for multiple streaming services. But according to Paramount (PARA)’s streaming CEO Tom Ryan, who spoke to Fast Company on April 21, the place of FAST services is not “substitutional,” but “complementary.”
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“We’ve seen that the average PlutoTV user has several paid services based on our research,” Ryan said, explaining that Paramount’s two services, Paramount+ and PlutoTV, work in tandem from a business standpoint. Paramount cross-promotes the services and uses its ad-supported Pluto TV platform to get customers interested in paying $5.99 per month for Paramount+.
“On Pluto TV, we regularly have channels that show some of the Paramount+ original programming that would ordinarily only be available to the Paramount+ subscriber for free,” Ryan said. “We don’t show all of that content, but we show enough of it to get people interested and engaged with the programming and to attempt to upsell them to Paramount+, and we see a huge brand-awareness lift.”
The rise of FAST services also coincides with the re-normalization of linear TV. The Walt Disney Company (DIS) is planning linear TV-style channels on Disney+, and Criterion Channel also launched its Criterion 24/7 service for live TV.
The rise of ad-supported streaming
Ad-supported streaming has caught on in popularity in recent years. Prime Video by Amazon is one of the latest examples, which started charging $3 extra on top of a Prime subscription for users to access ad-free content.
There is also speculation that AppleTV+ will start to incorporate ads since Apple has begun hiring new ad executives, including NBCUniversal veteran Joseph Cady. These are examples of ads being incorporated into a streaming service that charges a monthly fee, so where does FAST fit in?
“You get a product that feels familiar, is easy to use, if not better, frankly, than traditional TV in terms of its UX and its usability,” Ryan said. “You get to dive right into great well-known content all for free, so it’s just a highly appealing product.”
Eyes have been on Paramount lately for several reasons, but most notably for the ongoing acquisition wars as different buyers look to take on the media conglomerate. The frontrunner choice looks like Skydance Media, owned by David Ellison, as the two companies have been in exclusive talks over a potential merger.
Paramount has made some cuts to its business in the meantime. Toward the end of last year, it sold Simon & Schuster, and the company announced it was shutting down its children’s streaming service Noggin in February. The news around Noggin followed a layoff of around 800 or 3 percent of employees globally. The company has also reportedly been looking for buyers for BET, which has its own subscription streaming service, BET+.
Not mentioned by Ryan is Paramount’s movements around bundling Paramount+. In December, the company was reportedly looking into a deal to bundle Paramount+ and AppleTV+, and in February there were talks of a similar deal but with NBCUnversal’s Peacock instead.