Free, ad-supported streaming platforms have long been seen as a supporting player when compared to premium subscription services like Netflix or Disney+. But with subscriber growth hitting a wall and streamflation pinching consumers’ wallets, the major Hollywood players are starting to turn to the FAST services’ playbook.
- On Monday, Sony launched a free live TV service on the PlayStation 5.
- Paramount+ is testing a free, curated selection of its sports and original entertainment content for U.S. mobile users, an individual familiar with the matter told TheWrap.
- Last month, Disney CEO Josh D’Amaro teased he was exploring launching a free tier for Disney+.
In 2024, Amazon folded free content from its shuttered Freevee service into Prime Video and now lets users sample movies and TV episodes via its Free Collection and through more than 900 FAST channels. And even Netflix co-CEO Greg Peters acknowledged in July that a free offering could “make sense in some markets.”
But the biggest indicator that Hollywood is betting on FAST as a key growth engine happened in June, when Fox agreed to acquire Roku for $22 billion. The move will marry The Roku Channel with Tubi, cementing Fox’s dominance in the segment and helping catapult it to the second-largest distributor by viewership in the U.S, per Nielsen.
The increasing adoption of free streaming offerings comes as Hollywood content budgets are being squeezed and consumers have gotten more selective about where they spend their money amid non-stop price hikes, especially with the largely free YouTube growing in its share of eyeballs. Experts told TheWrap that a free tier could allow the major streamers to expand their total addressable market to a younger and more diverse audience, more effectively monetize their vast libraries of IP, grow engagement and ad revenue and, most importantly, upsell and convert those free customers to their paid subscriptions and bundles.
“All of these companies’ biggest Achilles’ heel is the amount of money that they have to spend on premium content,” Hub Entertainment Research founder Jon Giegengack told TheWrap. “If people watch two or three episodes for free, the chances that they’re going to be invested and care enough to actually sign up and pay for a subscription is much, much higher than if they were just being asked to do that on the strength of a trailer.”
But it may not end up being the right answer for everyone. More free streaming tiers could potentially put pressure on overall ad pricing, experts said. In order to make a free tier’s economics work, streamers also need a scaled ads business in all the markets where it launches and the right differentiation of programming to avoid cannibalizing paid subscribers, Peters noted. You don’t want paid subscribers moving their subscription down to the free tier.
Notably, Hulu and Crunchyroll previously had free offerings that ended up getting scrapped entirely as they went all-in on subscriptions, though the latter’s content is included in Sony’s PS5 service and other FAST offerings. While Peacock discontinued its free tier for new users in 2023, the service still offers a selection of free episodes and 24/7 live channels, which has resulted in a “positive lift in winning back subscribers.” HBO Max also does not offer a free tier.
“The challenge for every streamer is deciding what it wants to achieve. If the objective is reach, discovery and advertising growth, free can be powerful. If the existing subscription business is highly profitable and still growing, the incentive is much weaker,” PP Foresight analyst Paolo Pescatore said. “The winners will be those that broaden their models without undermining the core economics that got them there.”
Paramount+, HBO Max and Prime Video declined to comment, while Disney+ and Netflix referred TheWrap to D’Amaro and Peters’ public comments respectively. Apple TV did not return TheWrap’s request for comment on this story.
Life in the FAST lane
FAST is an attractive category because even if there’s a difference in how much these users are willing to spend on TV — $75 a month for FAST users vs. $84 a month for non-FAST users, according to Hub Entertainment Research — streamers recognize its value as a gateway service.
The survey of around 3,000 consumers also found that 62% of FAST users would be likely or very likely to upgrade to a paid service to watch more of a show that they discovered for free. Of that total, 73% were between the ages 16 and 34 and 56% were 35+.
“There are a whole lot of people, mostly younger ones, that think about YouTube or other social content as different from but just as good as content that you pay for,” Giegengack said. “You’re leaving a whole lot of money on the table if you don’t bring something to offer to those folks.”
In 2026, ad-supported tiers from the major streamers will exceed $45 billion, representing 54% of total streaming subscription revenues globally, according to Ampere Analysis. By the end of the year, the firm also projects that AVOD and FAST platform revenues will surpass $10 billion for the first time.
How is FAST impacting the battle for attention?
While YouTube dominates the battle for attention on streaming, FAST platforms Tubi and The Roku Channel are slowly gaining ground on the major legacy streaming services.
In June, the two services accounted for a combined 5.2% out of the streaming category’s 48.5% share of TV viewing, per Nielsen. On its own, The Roku Channel finished the month with a 3% viewership share, above Peacock and Paramount Streaming’s shares of 2.3% each (Paramount also counts Pluto TV as its own FAST offering). Though Tubi’s share fell to 2.2% for the month, it remained above Warner Bros. Discovery’s 1.4% streaming share.
As of their latest available disclosures, Tubi reaches a total of 110 million monthly active users, while Roku reaches more than 100 million streaming households. If approved, the Roku-Fox deal could propel the Murdoch family-owned media giant to the second-largest distributor by U.S. viewership share behind YouTube. Meanwhile, Pluto TV, whose key metrics are no longer broken out, reported over 80 million MAUs as of 2023.
In the U.S. alone, the total number of FAST viewers is projected to hit 131.4 million people, or 38.7% of the population, in 2026 and grow to 149.4 million people, or 43.3% of the population, by 2030, per eMarketer.
What about the fight for ad dollars?
In the 2026 upfront, streaming captured more primetime ad spend than linear TV for the first time, growing nearly 30% to $17.2 billion, according to Media Dynamics Inc. But its average cost per thousand impressions (CPM) for a 30-second spot fell 4.9% to $25.90 as buyers continued to pressure sellers to cap hikes.
MDI President Ed Papazarian told TheWrap that ad buyers are using lower- priced FAST services, which usually sell more commercials per hour, as a way to hold streaming CPMs in check or lower them overall.
“The big, premium priced AVODS still get their share, or increase it slightly, like Netflix,” Papzarian said. “But FASTs are emerging as strong competitors for mass product advertisers who mostly want low-cost audience tonnage.”
While the introduction of free tiers would increase the major streamers’ overall ad viewing time and market share of time to sell, eMarketer senior analyst Ross Benes warned it could further pressure ad pricing. Benes predicted that a free tier’s CPM would likely be around $20 or lower, with an ad load of about 10 minutes per hour.
“CPMs keep falling because supply of ad impressions is growing faster than demand from brands,” Benes explained. “If multiple big services add free tiers, that will further increase the ad supply, which will contribute to stagnant to falling ad prices.”
Is a free tier right for everyone?
While some in the industry are bullish about the future of free streaming tiers, not all experts see it as an “inevitable destination.”
Pazarian believes there’s an opportunity for Netflix and Disney+ to carve out a worthwhile business, and even cut into Tubi and Pluto’s share of ad dollars, if the content included is “mainly mundane stuff,” such as oldie reruns. However, he warned that FAST is already a crowded field and that there’s “only so much viewing time they can feed on.”
For Disney, Pescatore said a free streaming tier could become a powerful part of the company’s wider flywheel that would allow it to leverage a mix of catalogue programming and creator content and better understand how its users are engaging to boost spending across the rest of the portfolio, including ESPN, games, merch, parks and cruises.
In addition to licensing its content to third party FAST offerings like Tubi, Roku and MyFree DirecTV, Disney offers themed 24/7 channels, known as “Streams,” inside its paid service that run continuous movies or episodes of shows like a regular cable channel.
But for industry leader Netflix, he argued there’s less of a sense of urgency as it already has scale, strong engagement and a growing advertising business.
“Free could make sense in selected markets where paid penetration is lower or affordability is a bigger barrier, but any gain in reach would need to outweigh the risk of users trading down,” Pescatore said.
Though Netflix has no near-term plans to launch one, it previously tested a free, ad-free plan for Android users in Vietnam and Kenya in 2021, which was discontinued after two years.
While some experts said a Paramount+ free tier would be a great sampling tool, Benes argued it would make more sense to absorb Pluto into the platform rather than confusing consumers with two separate free offerings. While the two services now sit on the same backend infrastructure, they continue to operate separately.
On the flip side, he believes an HBO Max free tier would be a great boost for its subscriptions and ad revenue. While it previously explored launching a FAST service, it ultimately ended up licensing its content for branded FAST channels on Tubi and Roku. It also offers live channels within the paid HBO Max service.
He also said Apple TV launching a dedicated free tier that offers a limited number of episodes could also make sense to boost subscriptions and awareness of its shows. The tech giant is notably the last holdout on introducing an ad-supported tier, though it has experimented with offering free content for a limited time in the past and lets users sample select episodes.
Experts also didn’t rule out the possibility of Peacock reintroducing a free tier for new users that could focus on social, creator-led and short-form content, as well as sampling select library programming and clips. In addition to Peacock’s live channels, NBCUniversal has already launched over 50 FAST channels on third-party platforms and offers free sampling through NBC.com and the NBC and Telemundo apps.
“Free tiers will become an increasingly important part of the market, but I don’t expect every major streamer to adopt one,” Pescatore said. “[Netflix and YouTube] are moving towards a broader mix of subscriptions, advertising, premium content and creator-led viewing. The next phase of streaming is likely to be about finding the right blend rather than everyone following the same model.”
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