YouTube is testing a new ad-supported channel service in an effort to compete with Roku, Paramount Global’s Pluto TV, and Fox Corporation’s Tubi.
The channel service is called “FAST,” short for “free, ad-supported streaming TV channels.” The experimental service appears on the “movies and TV page” for participating users.
If the trial is successful, it could be released later this year and expand YouTube’s share of the streaming space.
Already, YouTube is in negotiations with various cable and film companies like Lions Gate Entertainment Corporation, A+E Networks, Cinedigm Corp, and FilmRise, The Wall Street Journal reported.
Channels would be offered 55% of total ad revenue, much like content creators.
“We’re always looking for new ways to provide viewers a central destination to more easily find, watch, and share the content that matters most to them,” a YouTube spokesperson told The Hollywood Reporter.
“We are currently running a small experiment that allows viewers to watch free ad-supported linear channels alongside the wide variety of content we offer on the platform.”
Television streaming services represent a small yet growing portion of the entertainment industry. With more than 20 companies, the industry is worth $4 billion.
By 2026, however, the S&P Global Market Intelligence expects TV-like streaming hubs to be worth $9 billion.
YouTube, owned by Google (Alphabet Inc.), has more than 2 billion monthly users worldwide and captures a substantial share of Americans’ screen time.
Despite the recent downturn in ad revenue compared to 2020, YouTube attracted nearly 9% of Americans’ television viewing time, outpacing streaming giants such as Netflix.
John Kosner, chief executive of media consulting firm Kosner Media, said the move by YouTube would make sense given the trajectory and success of the company.
“Why would YouTube cede ground to Pluto and Tubi and the rest of them?” Kosner asked.
In contrast to Netflix, YouTube’s FAST would represent a return to a more traditional cable-like television experience. Instead of scrolling through films and shows, users would scroll through channels.
Vox estimated in 2019 that Netflix users spent 45 hours per year picking the shows they want to watch.
Moreover, FAST may offer an alternative for budget-conscious consumers.
“Free is free and in times of economic hardship, free is even more important,” said Danny Fisher, chief executive of FilmRise.
YouTube has already expanded into the television space with a paid subscription option. For $65 a month, YouTube TV subscribers can watch many major cable channels, including NFL’s football Sunday.
YouTube TV currently has around 5 million subscribers and trial accounts.