What Everyone (me) Got Wrong About the Streaming Wars

Media giants bet too big on the binge

Back in 2014, while working at the Wall Street Journal, I got meet with one of the founders of Pluto TV. When I filed my story on the just-launched video site, one of my editors asked me what I thought. “Yeah, that’s not gonna work,” I said.

At that time, Pluto wasn’t aggregating old TV shows and movies, but rather stitching together content from YouTube creators and delivering it in linear form.

I scoffed. First of all, people watch YouTube on YouTube, I argued. And as for a linear feed - we were entering the on-demand era. Didn’t you just watch House of Cards? Don’t you know any young people - all they watch is Netflix?

“No one wants this,” I said.

I was reminded of this conversation when I sat down earlier this week with, John Halley, President, Advertising, Paramount for the latest episode of my podcast Next in Media.

Halley oversees a number of ad-related businesses in the Paramount stable, including of course Pluto, which the company acquired in 2020.

Around the time of the deal, Pluto had 12 million monthly active users in the US and roughly $60 million in revenue. Today, thanks in part to killer distribution and Paramount’s library plus promotional heft, Pluto reaches 45 to 50 million monthly active users and pulls in over a billion in annual revenue.

Pluto is not the only FAST (Free Ad Supported Streaming Service) of course. Tubi has a been a smash for Fox. There’s Xumo, Crackle, and a slew of baked in free streaming services on Vizio, Sony, LG and other TV manufacturers.

So what did I - and to be fair, so many others - get wrong about the streaming-first consumer in an era when interruptive ads and linear viewing was supposed to be dead and burined?

Halley told me that back around 2015 or 2016, when networks were racing to test digital originals and ‘webisodes,’ Paramount saw some interesting signs of where things might be headed.

“When we looked at the monetization dynamics of our digital business back in those days, what we observed is that we were spending all this money developing short-form exclusive content for the digital consumer,” Halley said. “When we looked at the actual usage pattern, all the consumer duration was happening in full episode video. So people weren't watching the things that we were spending all this money on, they were watching our TV shows on their laptops and iPhones.”

Ok, so people liked streaming long form shows. Still, weren’t we all going to just binge everything, preferably without ads?

After all, we’ve seen the tech industry, and all of the big media titans chase the Netflix subscription model as the end all be all- in part because the assumption was that a new generation of viewer had no ad tolerance, and only wanted to watch what they wanted to watch when they want to watch.

Well, it turns out that making those choices is often too hard- and the streaming wars actually made things worse. Plus, it’s easy to forget how much people watch TV historically in all parts of the day and for all sorts of different reasons. You don’t always want to disappear into a binge - sometimes you want put on a cooking show or talk show and lean back. Sometimes you throw on a random episode of SVU half way through and try to remember if you’ve already seen it.

That’s why in Pluto’s case, “it's not just entertainment, it's kids, sports, news, etc.,” Halley said. “We're very focused in programming all our assets around the total household, and so it has a pretty broad variety of content.”

Most of the other FASTs have followed suit, either back pulling in live linear news feeds or creating programming blocks centered around lifestyle content.

Because often with TV, you don’t want to think much. After all, it’s called the Idiot Box for a reason.

“I think this notion of like a linear lean back experience is critical to the success of FAST products,” Halley added. “We live in a world of too much choice. Consumers don't always want to work that hard for their entertainment.”

To that point, Halley said that average session times in FAST linear environments are much longer than they are in on-demand environments where people come in and cherry pick episodes.

You know who likes those long linear session times? Brands. Like old fashioned TV, FAST services are ad space generating machines. Unlike most subscription services, they create a ton of inventory because people throw them on.

This has helped Paramount build its connected TV business. Selling ads for Paramount+ is great, but you hit a ceiling. Selling audiences across Paramount+ and Pluto, and you’ve got something.

“We made the choice to really bundle the services so that we could merchandise the combined scale of those services,” Halley said. “And the reason that we did that is that we believe that consolidated digital audience scale is the most valuable product that a seller can offer a buyer.”

Which is probably why Amazon has decided to start introducing ads into its Prime service, and why WarnerDiscovery has kicked around the idea of a FAST service. Even as more streamers offer ad-supported options, the number of ad avails is naturally limited.

The question I’d ask - and others already have - is when does Netflix consider launching a FAST? Does that make sense for their business? I’m not sure.

As Halley put it, FASTs “deliver high quality experiences to consumer without the friction of search and selection and choice. I mean, it's that simple. I mean, I think that Fast has taught us something about human nature.”

Sometimes you just want to lean back and throw on some Hunter reruns.