POV: YouTube Tests Free Ad-Supported Streaming Channels Hub

Background:

YouTube is testing a hub of free ad-supported streaming channels as it continues to expand its streaming ambitions.

Details and Implications:

YouTube is experimenting with an offering to allow viewers to watch free ad-supported linear channels on its platform via a dedicated hub. Free, ad-supported TV services (FASTs) typically allow users to look through a list of channels, and dip in and out of content that is already playing.

The Google-owned service is in talks with a number of entertainment companies including Lionsgate and A+E Networks (operator of History, FYI and Lifetime amongst other channels) to bring TV Shows, movies and even whole channels to its platform.

This move would put YouTube in more direct competition with leading free ad-supported streaming TV channels such as Roku, Paramount’s Pluto TV and Fox Corp’s Tubi. It could also bring YouTube into more direct competition with those subscription-based providers who also offer ad-supported models, such as the new offerings from Netflix and Disney+.

For now, this is a limited test in the US for YouTube to assess viewers' interest. If successful it has been suggested that YouTube could ask for a 45% cut of the ad revenue which is the deal it operates with its content creators.

This new hub would be an expansion of YouTube’s free, ad-supported and paid/subscription streaming offerings. YouTube added some free television shows that were supported by ads to its catalogue in 2022 and it has been doing the same thing with movies for years.

Late last year, YouTube launched a new streaming service store called Primetime Channels that lets viewers sign up for subscription streaming services such as Paramount+ and Starz directly through YouTube.

YouTube also offers its own paid streaming service, YouTube TV for $65 per month, which lets users stream a package of major cable channels and provides a similar drop-in-and-watch experience with standard television channels. Very recently the streaming platform struck a $2 billion acquisition rights deal with NFL Sunday Ticket, which will be streamed on YouTube TV and YouTube Primetime Channels this year.

Summary:

Already a dominant online video player, this latest experiment is part of YouTube’s ambition to be the go-to destination for viewers to access all their favourite content - including content from creators as well as traditional movies and TV shows, sports and more. The FAST hub would help YouTube better compete with Roku, Pluto TV, Tubi and others if it rolls out more broadly. The service has the potential to do well given the size of YouTube’s audience - the platform has more than two billion monthly users - and a likely appeal to cost-conscious consumers.

Further Reading:

WSJ | MediaPost | TechCrunch | The Verge