The final months of 2019 have been busy ones for the video-streaming marketplace. November saw the long-awaited debut of Walt Disney's (NYSE:DIS) new streaming juggernaut, Disney+. Apple (NASDAQ:AAPL) also entered the market in November: The tech giant released Apple TV+, a premium subscription service housed within the free Apple TV app. And now Plex, a company specializing in media servers and entertainment platform software, has introduced a new streaming service of its own. The difference is that this one is free.

Plex's new free service will not be alone, of course; plenty of other streaming and tech giants are in on the market. Sony (NYSE:SONY) Crackle, the independent Tubi TV, Amazon's (NASDAQ:AMZN) IMDb TV, and Roku (NASDAQ:ROKU) Channel are among the other free-to-stream services on the market right now. These advertising-based video on demand (AVOD) services have long coexisted with subscription video on demand (SVOD) giants like Netflix (NASDAQ:NFLX). But as Plex's version enters the world, it adds to a video-streaming service population that has never been larger. As the market continues to fracture, where will AVOD services fit in?

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AVOD has been around for a long time. An early form of Sony Crackle (back then, called simply "Crackle") arrived in 2007; at the time, Netflix had been streaming for less than a year and Hulu had not yet launched. Crackle expanded its offerings with apps for platforms like Roku in 2011, the same year that Amazon paired streaming video offerings with Amazon Prime memberships.

The role of AVOD services in a Netflix-dominated world was pretty clear. With streaming being virtually synonymous with SVOD services, there weren't many tech-savvy streaming viewers relying on free alternatives alone; instead, the AVOD gang was meant to be supplemental. When nothing on Netflix looked good, or when some specific title was missing, there was a chance that a certain subset of users would glance at Crackle, Tubi TV, or Chicken Soup for the Soul Entertainment's Popcornflix to see what was on.

Suddenly, though, there are a lot more streaming apps to check. A dedicated streaming fan could theoretically browse Netflix, Amazon Prime, Hulu, Disney+, and Apple TV+ before turning to free options. Soon, the list of SVOD options will include Comcast's Peacock and AT&T's (NYSE:T) HBO Max as well.

AVOD in a fractured market

Two possibilities emerge. On the one hand, a fractured market could be good for AVOD services. As it loses licensed content, Netflix's library becomes less comprehensive; with streaming divided in such tribal fashion among companies looking to combine studio muscle and streaming prowess, less-impressive libraries could drive users to AVOD alternatives (especially since nonexclusive content deals often lead to a given title being available simultaneously on Hulu, Amazon Prime, and AVOD services like Tubi TV). Subscription fatigue could limit paid options, too, and frustrated users might seek out free options as the effective cost of streaming entertainment rises with each new "essential" service.

On the other hand, the proliferation of streaming services could be terrible for AVOD's fortunes. Subscription fatigue isn't just about subscription fees; it's also about opening a dozen different apps just to find something to watch. The AVOD services tend to have less to offer in terms of content than their paid peers, and the weakest services may get cut from user habits. Besides, the proliferation of streaming services includes AVOD options. Plex's arrival means new competition for Sony Crackle (already not having the best time) and the rest of the AVOD gang.

The role of hubs

There's another factor that looms large here: the rise of the streaming "hub." Apple TV+ is a new streaming service adding to the messy situation, but the Apple TV app is a different story. Apple's setup invited users to stream content from multiple sources through the Apple TV app. In addition to premium content options offered by Apple TV+, users can access subscription-only content from platforms like AT&T's HBO and ViacomCBS's Showtime. Crucially, Apple TV also provides access to free content.

More than just a Roku-like platform that allows users to access apps in one place, Apple TV puts the actual TV shows and movies from these services into the same in-app experience. This is happening elsewhere, too -- the Amazon Channels platform is fairly similar. By linking up with "hubs," relatively small-time services like Sony Crackle may be able to avoid the consequences of app fatigue while taking advantage of subscription fatigue.

If AVOD services have real potential for popularity, hubs will prove crucial. If the role of AVOD services is more limited, AVOD options may simply cease to be ends in themselves. That would be bad news for Sony Crackle and Tubi TV, but would not be nearly as devastating to Amazon or Roku -- both of which use their AVOD options to hone their advertising platforms, differentiate their offerings, and add a little filler content to their platforms and apps.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.