With so many subscription video on demand (SVOD) services competing for consumers’ wallets, media industry heavyweights are betting that “free” is a better strategy. They can avoid pouring billions of dollars into original content. They can also offer advertisers a compelling way to reach desirable audiences.

Streaming services collect much more detailed information on viewers that broadcasters ever dreamed of having. This gives advertisers more granular ways to target ads and makes campaigns easier to track. More importantly, cord cutters are a much younger demographic than broadcast or cable viewers.

It may have been under the radar, but ad-supported video on demand (AVOD) is about to become a very big deal for the advertising industry. Streaming television, Magna Global’s David Cohen told Ad Age, “represents something like 14 or 15 percent of an average consumer’s video diet, yet it’s under 5 percent of spend. “

Here’s a rundown some key players that will shape streaming TV’s free future.

Viacom’s Pluto TV

Live TV on Pluto TV
Source: Pluto TV

Viacom is one of the media giants that have decided against an SVOD strategy. Instead, it is building a digital strategy based on traditional distribution and ad-supported streaming.

The head of Viacom’s operations in Northern Europe, James Currell, said in a speech that “Viacom believes the global SVOD sector is becoming too crowded and capital intensive. So, instead, we’re focused on building scale in ad-supported streaming.”

Buying Pluto TV for $340 million earlier this year was central to that strategy. Pluto TV uses streaming to recreate the linear television-watching experience. The ad-supported service has no on-demand content and no cloud DVR. You just open the app and watch whatever’s on.

In a memo to employees, Viacom CEO Bob Bakish explained the purchase. “Pluto TV is the leading platform to serve the marketplace at the free price point.” Furthermore, the built-in audience “immediately adds billions of high-quality addressable advertising impressions” that Viacom can sell.

Viacom ad executive Sean Moran told Variety that Viacom’s digital platforms, including Pluto TV, reach “over 50% of the people between 18 and 34.” That’s a much younger demographic than traditional TV.  “We are doing business with clients we’ve never done business with before,” Moran said.

Tubi TV

tubi tv best free streaming services
Source: Tubi TV

Tubi TV applies the ad-supported streaming model to on-demand movies and TV shows. The company boasts a 40,000-hour library of content that’s twice as large as Netflix’s. This large selection and the free-to-watch business model drove a four-fold increase in users last year. As a result, Tubi TV’s advertising sales soared. The company’s 2018 fourth-quarter sales exceeded all of 2017.

In an interview with S&P Global interview, Tubi TV CEO Farhad Massoudi said that “Even the giants are going to wake up and realize that AVOD is a much bigger market and they’re focusing on the wrong [SVOD] bet.”

Massoudi also explained that Tubi TV’s success has created a virtuous cycle. As content producers like NBCUniversal let Tubi TV carry better quality content, the free service becomes that much more appealing to consumers.

“There isn’t room for too many SVOD services on an average household basis,” Massoudi told Fast Company. “That means [ad-supported streaming] … is the next big frontier.”

Walmart’s Vudu

vudu best free streaming services
Source: VUDU

Two giants in e-commerce see free-to-watch streaming as a way to link online advertising to their own retail operations. First up is Walmart which bought Vudu back in 2010. Vudu already has an ad-supported free streaming service that lets customers watch movies without the normal rental fees, but Walmart wants it to do more.

Original content will play a role in getting more people to watch Vudu’s free streams. A deal inked with MGM will produce original content including a remake of the 1980s comedy Mr. Mom. Other shows will include a reboot of Nickelodeon’s Blue’s Clues and a new travel show starring Queen Latifah.

But Vudu will be about more than content. Walmart executives revealed their plans to leverage the retailer’s strengths to turn Vudu into a powerful advertising platform. Walmart accounts for half of the televisions sold in the US every year thanks to the 250 million Americans who shop in a Walmart store.

The new Vudu will insert “shoppable content” into its video streams. These interactive ads will let viewers purchase the advertised product from Walmart without leaving the Vudu app. Sources told Bloomberg that several of Walmart’s major suppliers have already bought ads on the new service.

Amazon’s IMDb Freedive

Watch IMDb Freedive
Source: IMDb Freedive

Wal-mart’s biggest competitor, Amazon, launched the ad-supported IMDb Freedive in early 2019. IMDb hosts more than 250 million people each month who search for information about movies and TV shows. The service had already offered short-form content like trailers and actor interviews, but now Amazon wants IMDb to be a viewing destination.

IMDb Freedive features older TV series like Heroes and movies like The Last Samurai. The service does have some original content, but it’s mostly inside-show-business programming. Freedive won’t include Amazon Prime Originals.

All of this free content will be supported by advertising. The news network Cheddar reported on the heavy push Amazon executives are making to get advertisers on board. Apparently, it’s a tough sell since Amazon wants multi-million-dollar commitments but hasn’t fully locked down its content library.

Roku and The Roku Channel

Watch The Roku Channel
Source: The Roku Channel

Roku has transformed itself from a sometimes-sketchy way to watch free videos to a major industry player. In addition to selling millions of streaming sticks, CEO Andrew Wood told investors that “more than one in three smart TVs sold in the U.S. in the first quarter were Roku TVs. [Roku is] now the No. 1 smart TV OS in the country.”

What’s even more remarkable is that hardware sales and OS licenses only generate a third of Roku’s revenue. The rest is Roku’s “platform” business which includes advertising. Companies can buy placement on the Roku user interface, but ad sales are increasingly coming from the free-to-watch Roku Channel.

“Our ability to deliver unduplicated incremental reach is unique to the ad industry and great for advertisers,” the company said in its latest earnings release. The company recently doubled-down on that ability by giving advertisers sophisticated tools for analyzing ad performance throughout the sales funnel.

“Already, we’re in a great place to demonstrate that ads on Roku drives significantly more impact than linear and other forms of digital advertising,” Roku platform chief Stephen Rosenberg said.