Hollywood Faces a Major Challenge with Modern TV Viewing Habits

More viewers are now turning to free TV options in a trend that threatens to disrupt Hollywood’s decades-old model that relies on people paying for content. Over the years, Hollywood has invested heavily in building massive libraries for which people would subscribe. However, by 2022, this model proved challenging, leading to the introduction of cheaper, ad-supported options.

What has particularly grabbed attention over the past year is the rise of “free, ad-supported TV” or FAST services. Leading this trend is YouTube, which, according to Nielsen, became the first streaming TV service to surpass 10% of total viewing as of July. Netflix, meanwhile, trails at 8.4%. Other platforms like Tubi, The Roku Channel, and Pluto TV are also catching up with their paid counterparts. In July of this year, the share of TV viewing for the biggest FAST services increased to 14.8%, up from 12.5% in the previous year, while the share for paid streaming remained stagnant at 17.2%.

The rise of FAST services is not just a result of cost-cutting. Many of these services offer experiences similar to old-school linear TV, allowing viewers to flip through channels easily, making it an effortless way to watch TV passively.

Legacy media companies also have their own FAST services. For example, Fox’s Tubi has been the fastest-growing streamer in the past year and has become a favorite among Gen Z. Paramount’s Pluto TV and Comcast’s Xumo are also in the mix, with Warner Bros. Discovery reportedly not far behind. Despite this growth, profitability remains a challenge. Tubi, despite launching over a decade ago and boasting 80 million monthly active users, has yet to turn a profit.

Figuring out how to monetize free TV is just one problem plaguing legacy media. Hollywood also faces other challenges, including a recent ruling against a to-be-launched sports streamer, raising questions about the future of the cable bundle amidst fierce competition.

Moreover, Hollywood struggles to keep pace with an audience that demands content at breakneck speed. Platforms like YouTube, TikTok, and Instagram benefit from user-generated content that is constantly updated and highly relevant. In contrast, traditional TV programming takes much longer to produce and can quickly lose its “hot” status by the time it reaches audiences.

Attempting to emulate the success of YouTube or social media on TV comes with its own set of problems. The challenges are evident in Amazon’s project involving the YouTube sensation MrBeast.

Source: Business Insider