Free the streams!!!!
“The best things in life are free”
“Everything old is new again”
Pick your tired cliche, but all applies as we start looking at where TV is trending.
Ever since Netflix and its industry-shaping market power announced an ad-supported tier, competitors fell into line behind them. It has been evident to me that this was putting subscription streaming on a pathway towards an inevitable free streaming future.
The streaming services, once known for low-cost entry into subscription television, would soon be seeking to monetise their large subscriber bases and their attention spans, seeking ad dollars rather than direct subscription fees.
The challenge ultimately facing the paid subscription services was the rise in popularity of US FAST platforms like Tubi, Roku Channel, and Pluto TV. They were proving that there was an audience for platforms with a similar experience, but completely ad-supported.
Their market share has been growing exponentially over the last couple of years, with audiences drawn to the always-appealing offer of ‘free.’
Something to keep in mind with audiences is that the way they broadly consume TV is very different to the way people talk about consuming TV. It’s almost never purposeful, with so much of what we view just taking place in the backgrounds of our lives. Audiences are wise to the idea that they don’t want to be paying $10-20 bucks a month to watch content that they’re not actually paying that much attention to anyway.
And then you have the other giant in the lounge room: YouTube. A different proposition with the service dominated by UGC and indie productions, it has become a default viewing experience now for most viewers.
According to Business Insider, Disney is planning a free-tier.
Product and tech chief Adam Smith spoke about enabling free-tier content during a streaming town hall on Thursday afternoon, one staffer said. Smith didn’t share a timeline for this initiative or a sense of the scope, this person added.
A person familiar with Disney’s streaming strategy said these talks are part of an ongoing discussion about concepts to better serve fans.
Netflix embracing free is a much bigger leap for the business. Disney, Prime Video, HBO Max, Apple TV, etc all operate with a more complicated revenue fly-wheel. It benefits Disney to offer free content to grow its pie of potential customers who might then go on to buy the merchandise, theme park tickets, movie tickets, etc.
Netflix, despite efforts to diversify its revenue, is still mostly a pure play subscription streamer. It doesn’t have a lot of optionality when it comes to its pricing structure with a free tier likely to add a large degree of confusion and annoyance for customers. It puts them on track for another Qwikster-level debacle.
It’s a shame that Netflix doesn’t also own a prestige subscription service like HBO, which it had in its grasp just a few months ago. That would provide considerable opportunities to create a clear line between a free and a premium subscription offer.
Instead, Netflix is looking at shifting its platform into more of an old-school experience by introducing live channels as a way to boost time on the service. As per the Wall St Journal:
But one metric was pointing in the wrong direction: Subscriber engagement was showing signs of decline, according to attendees. At the time, it was a small part of a conversation about the company’s goals, but it has since become a frequent topic of discussion at meetings, people familiar with the matter said.
Engagement, which measures how long people spend watching content and how frequently they finish a movie or series, is the holy grail in modern Hollywood. It signals that customers are satisfied and less likely to cancel their subscriptions.
While Netflix remains the industry leader among subscription-streaming services, shares are down more than 40% over the past 12 months. In April, the company reported disappointing guidance for the second quarter, including lower operating margins year over year. Its share of TV viewership fell to 7.8% in April, according to Nielsen, the lowest level since May 2025.
There’s a high degree of ‘watch this space’ on where the industry is heading. But the greater that YouTube audience becomes, the less the streaming services are going to resemble what they did at launch.
This week’s Cool-o-meter
News Desk
David Ellison’s confidantes have pushed him to consider moving Paramount’s corporate headquarters and reallocating much of its $30 billion in planned spending outside the state if California Attorney General Rob Bonta were to sue to stop the merger with Warner Bros Discovery. Read: Semafor
Production assistants on Cupertino, the upcoming drama from The Good Wife and Evil co-creators Robert & Michelle King, have filed to unionise. Read: THR
According to Matthew Belloni, Netflix, Sony Pictures, and Paramount have all had conversations about buying Letterboxd. Read: Puck
Prime Video has renewed House of David for a third season. Read: Variety
HBO has reportedly passed on a period-era take on V For Vendetta. Which is probably a smart move. We’ve seen that already. Read: Dark Horizons
That’s the newsletter for the today.
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