Industry insiders say free streaming services like Tubi and XumoTV could become M&A targets, as subscription fatigue sets in

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  • Almost half of US consumers think there's too much choice in subscription services.
  • That's helped nurture growth of free ad-supported streaming services, or FASTS.
  • Experts are eyeing these free streaming services as the next likely target for M&A.

Even as WarnerMedia, Disney+, and Apple prepare to launch paid streaming services, free ad-supported streaming TV services, or FASTS, are taking off as people look for no-commitment viewing options and subscription fatigue sets in. Almost half of US consumers think there's too much choice in subscription services, according to an annual report by Deloitte.

These companies, like Pluto TV, Tubi,  XumoTV, and the Roku channel, have grown in monthly average users over the past year, according to the companies' own figures. Video supply-side platform Beachfront reported a 1,640% increase in ad requests to nearly 30 billion in 2018 from 1.7 billion in 2017, mostly coming to the free streamers.

These free streaming options are popular because they have lower ad loads than traditional TV and offer familiar content that people can play in the background while they're doing other things, said TVREV cofounder and lead analyst Alan Wolk, who wasn't involved with the report.

"They are surprisingly popular," Wolk told Business Insider. "It's a bunch of of 80's movies and reruns that Netflix didn't want to buy." 

Acquirers are eyeing streaming services

These streaming services are seen as the likely target for acquisition by a variety of companies, said Wolk, citing recent conversations with executives at TV networks, agencies, and technology providers for a report he published on the OTT industry.

These services look increasingly attractive to companies that recognize not all consumers are willing to pay for multiple television services, and traditional MVPDs and cable and broadcast companies face pressure to innovate through OTT services to keep up with changing viewing habits.

There's already been one big acquisition in this space, with Viacom acquiring Pluto TV for $340 million in January.

People are hitting their limit for paid TV and often just want someone else to make the viewing decision for them, Wade Davis, chief financial officer of Viacom, told Business Insider in January. "We think it's more than a billion-dollar business," he said.

Device makers like Vizio (which already has a streaming service powered by Pluto TV) or Samsung could look to acquire a free ad-supported service, Wolk said. That would allow either company to build a "walled garden" where they could sell their own ads and promote their streaming services as the Roku Channel and Amazon Freedive do.

Read more: Satellite giants Dish and DirecTV are taking wildly different pricing approaches to streaming. Here's what it says about the future of live digital TV.

Another potential buyer is broadcaster Sinclair, Wolk said. Sinclair which launched a free, ad-supported streaming service in January called STIRR, offering local news and other content to cord cutters. There are unconfirmed reports that Sinclair is looking to buy Xumo, according to Variety.

Other possible acquirers are MVPDs like Comcast, whose core business is increasingly becoming broadband connectivity into the home. Content programming is expensive, and as consumers continue to cut the cord it might be cheaper for distributors with broadband businesses to forgo linear TV offerings altogether. Instead, they could offer service through one of the free streamers, said Wolk. 

Comcast has started to explore just that. In March, it announced a new $5-a-month aggregation service for its broadband customers, Flex, that lets them watch other streaming services they pay for, like Netflix or Amazon Prime, and 10,000 free programs, including live Tubi and Pluto TV.

SEE ALSO: Satellite giants Dish and DirecTV are taking wildly different pricing approaches to streaming. Here's what it says about the future of live digital TV.

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Contributer : Tech Insider https://ift.tt/2WpPZh7
Industry insiders say free streaming services like Tubi and XumoTV could become M&A targets, as subscription fatigue sets in Industry insiders say free streaming services like Tubi and XumoTV could become M&A targets, as subscription fatigue sets in Reviewed by mimisabreena on Thursday, March 28, 2019 Rating: 5

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