Twenty percent of U.S. broadband households currently use an ad-supported OTT service, and 15% use a “freemium” service, according to Parks Associates research.
The research confirms the growing popularity of so-called freemium services — hybrid business models that combine free, ad-supported content with a premium subscription tier.
Currently, there is no clear market leader in the ad-supported and freemium OTT spaces: Pluto TV, The Roku Channel, Tubi TV, Peacock and Crackle all score relatively similar adoption rates, reports Parks' Research Director, Steve Nason.
“The newest offering, NBCUniversal’s Peacock, does have the reach, content and profile to disrupt this area, which could further boost usage of ad-based and freemium OTT among U.S. households,” he adds.
Consumer spending was shifting toward OTT services even before the coronavirus pandemic hit in March 2020, as more households continue to cut or trim their pay-TV services.
U.S. broadband households reported spending an average of $16 per month on OTT video service subscriptions in Q1 2020, behind $89 per month on pay-TV services, Parks research showed.
“A prolonged economic contraction could drive households to reduce pay-TV spending more, while also scrutinizing their OTT service stacks,” pointing to continued growing importance for ad-based services in the months ahead, notes Nason.