The video services landscape in the United States is undergoing a significant transformation, with nearly half of internet households opting for streaming platforms over traditional pay-TV. According to recent data from Parks Associates' Video Services Consumer Insights Dashboard, 56 million US households have cut the cord, embracing the convenience and cost-effectiveness of online video services. Additionally, 12% of these households have never subscribed to traditional television services, highlighting a growing preference for alternative viewing options. Service providers are adapting to this shift by introducing competitive pricing models, bundling strategies, and hybrid monetization approaches. The rise of ad-supported video on demand (AvoD) and free ad-supported streaming TV (FAST) services underscores the market's demand for lower-cost alternatives.

The emergence of cord-nevers presents a unique opportunity for streaming providers. This segment has never paid for traditional pay-TV but has embraced streaming-first services that offer different value propositions. Streaming platforms have successfully monetized this demographic by offering tiered subscription models that cater to varying consumer preferences. Jennifer Kent, Vice President of Research at Parks Associates, notes that streaming services have found innovative ways to engage a market segment that previously did not prioritize subscription video or has grown up in an era where streaming is the norm. These services have redefined what consumers expect from subscription-based entertainment, making it more accessible and appealing.

Leading streaming platforms, including Max, Netflix, Disney+, Discovery+, Paramount+, Prime Video, Hulu, and Peacock, have seen a notable trend where consumers favor basic tiers with ads over premium, ad-free subscriptions. As of Q3 2024, 59% of subscriptions across these eight major SVoD services were for basic tiers with ads. This preference reflects a growing desire among viewers to balance affordability with content access. Providers are responding by adopting hybrid models that offer both ad-supported and ad-free plans, creating a win-win scenario for consumers and businesses alike. Ad-based tiers provide a more cost-effective option for users while generating higher profits for service providers.

Consumers are increasingly sensitive to rising costs in streaming, exacerbated by years of high inflation. This financial pressure drives many to seek more economical viewing options, intensifying competition among streaming vendors. In response, companies are expanding their offerings of subscription tiers with ads and free ad-supported services. This strategy not only enhances profitability but also aligns with consumer expectations for more flexible and affordable entertainment choices. The evolving landscape of video services demonstrates a clear shift towards a future dominated by streaming platforms, with providers continuously innovating to meet the changing needs of their audience.