Are Streaming Services Reverting Back to Traditional TV Channels?

Warner Bros Discovery recently signed an agreement with Roku and Tubi to introduce free, advertisement-supported television (FAST) channels under the Warner Bros brand on their respective services.

The recent licensing deal between Warner Bros Discovery, Roku, and Tubi caused a stir, as it includes popular shows such as Westworld and The Bachelor being made available to viewers on the two streaming platforms. This move comes after Warner Bros Discovery’s decision to remove content from its own streaming service, HBO Max, during the latter half of 2022. The removal of Westworld particularly came as a surprise.

Some companies, such as Disney and Netflix, have explored the option of offering lower-priced ad-supported tiers as a means of generating additional revenue. Warner Bros Discovery seems to be indicating that licensing out premium content to other services may become a central part of their strategy.

FAST Channels Increase in Popularity

In a recent article, analyst Alex DeGroote told The Media Leader that Warner Bros Discovery’s partnerships with Roku and Tubi “prove once and for all that the average household has very limited appetite for multiple paid subscription services.”

According to DeGroote, streamers are likely to become more like traditional TV channels, thanks in part to the increasing popularity of FAST channels amongst cord-cutters.

“We are seeing content players increasingly shift their focus towards capturing this audience,” he said.

The availability of premium content on FAST channels represents a positive outcome for both content owners and consumers. Additionally, it offers a win for advertisers, who can now place advertisements against premium content that was previously only available on ad-free platforms.

Aaron Paul and Evan Rachel Wood in HBO’s Westworld. Photograph by John P. Johnson/HBO.

Rebecca Candeland, head of AV at Publicis Groupe media agency SparkFoundry, expressed excitement about the deal.

Back-catalogue content is traditionally key for driving large proportions of viewing on the likes of Netflix, so this is a savvy move by Roku and Tubi to bolster their content choice for viewers whilst supporting their existing own content creation. […] It will be interesting to see if further deals like this extend out to other content providers to start licensing content to third parties.” – Rebecca Candeland

Despite being streaming services, FAST channels operate more like traditional broadcast television, where programming is aired at specific times and interrupted with advertisement breaks.

Although they employ a traditional method of content delivery, these free ad-supported TV channels have proven to be successful. In the third quarter of 2022, Tubi recorded 56 million monthly active users, and Pluto TV reached 72 million monthly active users, which represented a 33% increase compared to the previous year. Meanwhile, Roku reported reaching its own milestone of 70 million monthly active users last month.

“The industry looks to these services as money makers that can bring in consistent revenue without the ups and downs of pulling in subscribers,” added DeGroote.